15 years back I started my first assignment with a company which used to help lenders- Banks and HFC’s outsource their activity on collections and recoveries so that they can focus on their core activities. Not all organizations had dedicated collections and recovery team at that time and the ones which had, didn’t had the kind of success rate which they were expecting.
So over the period we have had many regulations with clarity coming on how to deal with assets which went bad. A new segment of entities which are experts in restructuring became prominent 10 years back- asset restructuring companies – ensuring quick resolution to the situation of collections/recovery/bad assets.
Two years back, Bankruptcy act got finally in action and we have professionals who are expert in this area- the resolution professionals.
So the thing is till all this while, credit assessment was one of the core activities of the lenders along with mobilization and deployment of funds. That is something which has undergone a tremendous change over the period.
The concept of CPC/CPA ( outsourced model of doing credit assessment ) started to grow. It is on verge on becoming the model now with this being the new KPO boom in India.
- More opportunities being created and helping in quicker service delivery considering these units work on 24*7 basis.
- Technology being used as an enabler. .
Not so good part
Sales is partly outsourced ( in terms of channels like DSA , co lending models with fintech firms etc), credit assessment on verge of being outsourced to a large extent in the times to come, entities specializing in collection/recovery & turning around already there.
As of now decision to whether lend or not rest with lenders, but who knows that may or may not continue 10 years down the line.
So who will take the responsibility of collecting back the amount from customers esp for banks which has the depositors money.
Or will there be a new model wherein the depositors themselves put the money and decide on where they want to invest- a market place similar to REITS etc.