Empowering technology to solving the Indian NPA crisis

NPA crisis

The rising of NPA crisis has put the Indian banking segment under a tremendous measure of pressure. As per the Reserve Bank of India’s Financial Stability Report on June 2018, the gross non-performing resources proportion of the SCBs ascended from 10.2 percent in September 2017 to 11.6 percent in March 2018. This scenario is relied upon to intensify because of the PCA system that could help moderate financial stability hazards by capturing the decay in the banking sector.

What Increased The Crisis?

Numerous variables have set off the present NPA crisis. Organizations that were obligation ridden were permitted to raise more debt from the framework. Relaxed lending standards by banks to cooperate without due constancy and expanded selling of unsecured loans bothered the emergency. Another reason is the absence of possibility planning and absence of presence of structures that could help relieve project risks.

Different Agencies

Government and financial organizations have been trying to recoup extraordinary loans and set up stricter standards and directions that could help maintain a strategic distance from the circumstance later on. A portion of the outstanding enactment incorporates the IBC  the SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest) Act and the RDDBFI. Additionally, Debt Recovery Tribunals, were likewise set up too quickly track procedures.

While it is a praiseworthy reality that institutions have commenced corrective actions to prevail over the NPA situation, one decisive factor that has been overlooked is Technology. Yes, technology absolutely has the impending to address the NPA crisis in its own way. And looking at the current pace of retail lending, whether through banks, NBFCs or the mushrooming fin-techs, we may soon be gazing harder at retail NPAs and that’s where technology will participate an essential role.

Be it progressed examination identified by considering shopper conduct, business knowledge or information science, technology can and will empower an entire arrangement of conditions that will help distinguish early flags of focused on records in shifted divisions to additionally fragment or gathering accounts requiring proactive separated medications. The technology as of now has shown its potential inside the financial division – from I-managing an account to credit assessment buying protection or shared assets or recording of expenses. The following stage, in any case, which huge numbers of us are as of now chipping away at is to coordinate accumulations in the general hazard administration wireframe in order to check the NPA crisis from working up in the retail loaning space the manner in which it has tormented the corporate portion.

Essential role of Technology

Technology can add colossal weight to the credit monitoring and recovery process. Banks need all the significant information about the borrowers to settle on an educated choice to process or broaden the credit line. Data analytics is one such solution. It can enable banks to assemble and order the borrower along these lines appointing a hazard score to every borrower. This can be executed for two angles – confirmation of new borrowers and constant checking of existing borrowers.

Drawing from the past endeavors of data processing, technology is more developed today and can give solid answers for viably distinguish focused on records, separate borrowers’ online networking profile and group account wellbeing dependent on stores of accessible client information.

On the SME/Corporate side, information investigation and measurable detailing can take out the control of organizational information and realize straightforwardness in the assessment procedure. This measurable data can reveal designs through prescient investigation and give early cautioning signs of potential defaulters and assess whether organizations are meeting their budgetary commitments on time, helping banks to settle on educated choices. In addition, different extra macroeconomic measurements could be calculated in alongside custom parameters that banks regard fit to suit the necessity for qualification and confirmation.

Another angle that innovation could contribute is scaling up of the team. Though early warning signs (EWS) components have been organized, most of the work is as yet done physically. Recuperation of NPAs is a tedious procedure that requires conveying and overseeing new assets that could expand the fundamental costs trouble on the budgetary foundations. Here’s the place an amalgamation of innovation and task force could enable scaling to up the profitability and accelerate the procedure to handle the issue of NPAs. The foundational system could incredibly work at the root level to recognize focused on records depending on the set parameters of the banks and inform the task force which can center around recuperation technique and joint effort for goals.


Additionally, changes in automation and analytics could convey fast and straightforward basic leadership. This will realize the more prominent responsibility of financial foundations, powerful checking of borrowers and prioritization of stress accounts.

NPAs hugely affect the managing an account banking sector and the national economy. Failure in the banking sector could significantly affect different areas and moderate development prospects for the economy. It is basic to realize new advancements that could work at the grass-roots level and help discover an answer for the current NPA crisis. With the concentration towards long-haul development prospects, it is basic for the administration, RBI and financial foundations to embrace innovative procedures that could achieve straightforwardness, viability, educated basic leadership and an inspirational viewpoint to the economy all in all.

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