The banking sector is the backbone of a country’s economy and directly affects its development. In order to ensure continued growth, it is critical that the banks and financial institutions are robust in managing the stress, particularly caused by Non-performing assets (NPAs) or bad loans.

NPAs are nothing but assets and loans that have become unrecoverable and costs banks a loss of plenty of resources – neither are banks able to earn interest on the locked amount in loans nor are they able to recover the base loan amount from the defaulters. Therefore, banks and credit societies must take serious measures to manage and recover NPAs.

Understanding NPA Management in Banks

As there has been a significant rise in the number of NPAs or bad loans lately, identifying the root cause has become critical. The major reason why NPA occur in banks is the adoption of bad lending practices at a bank’s management level.

NPA Management

Banks can deal with the problems of managing and recovering NPAs if they invest into right solutions. The NPA recovery tools are responsible for collecting data from across the sources and undergoing a predictive analysis for supporting lending decisions based on factors like repayment capacity, willingness to pay back etc. They also integrate with organisations like High Mark and CIBIL to learn about the borrower’s financial conditions and behaviour.

How NPA Management helps banks?

The regulatory bodies in India have been empowering banks by introducing ways to identify defaulters and recover loan amounts from them – Sarfaesi Act 2002, Lok Adalats, Debt Recovery Tribunals (DRTs) to name a few.

Banking solutions providers have also initiated NPA automation that can evaluate credit ratings, provide Early Warning Signals (EWS), categorise Special Mention Accounts (SMA) and take necessary actions like follow-up, schedule meetings, file legal cases etc.

DELINKURE – An NPA management tool by Sesame

Sesame Software Solutions has accumulated immense appreciation for its result-oriented banking solutions over the past 24 years. Its exclusive product Delinkure is developed with a view to cater to the problem of NPAs in banks. It is a comprehensive solution that can be plugged-in to a bank’s existing CBS and analyse customer data to take proactive actions for current and prospective delinquencies.

Key Highlights:

  • Analytical Workbench: a one-stop dashboard for conducting trend analysis, hotspot analysis to know the problems, causes and corrective measures in a bank, area, region, segment or other such factors.
  • Contact process: for communicating with the customers, setting reminders, following-up, escalating issues, fixing physical meetings, calling and emailing from within the application is possible.
  • Recovery: through various options like personal visits, online payments, cheque collection, cash etc. can be initiated. Also, legal notices as per Sarfaesi Act, DRTs can be issued for punishing defaulters.

To check out the benefits and features of Delinkure, click here.