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Sunday, December 23, 2012

For Corporation Bank, using technology to monitor loans is paying off

You feel happy when an SMS alert from your bank informs that money has been credited to your account. The same may not be the case when it is about a deduction.

What if your bank sends an alert on the EMI (equated monthly instalment) due, well in advance? If you are a genuine borrower, it may be a slight irritant. But it is one of the processes that Corporation Bank follows to monitor its loan accounts.

“Follow-up using technology is the key. Following up right from day-one can keep the portfolio in a healthy condition,” Ajai Kumar, Chairman and Managing Director of Corporation Bank, told Business Line here.

The borrowers need to be reminded in time, though most of them may not like it he said, adding that some of them turn defaulters because they either forget or don’t get time to pay.

SMS alerts indicate that the bank is making best use of technology to gauge the loan accounts through its ‘graded system of monitoring’.

Ajai Kumar said that the bank introduced this system in June. It is a focussed way of monitoring the asset. Loans in this system are graded based on the amount and the time overdue.

The bank has put in place a system where the Circle General Manager monitors loans up to Rs 10 crore, and the Zonal GM up to Rs 5 crore. Loans above Rs 10 crore are monitored by the head-office.

Now, every month a report is made under these categories which will have an annexure giving details of the balance, the limit, payment of instalments, and so on. It will also have information on whether all terms and conditions are invoked or not. Based on these reports, action is taken.

“In the case of Rs 10 crore and above, a consolidated summary comes to me. So I start actions on those,” he said, adding that no paper travels in this system. It travels via bank’s digital network from the branch to the head-office level. “The top management information dashboard on the computer, iPad and iPhone helps me monitor the assets and review the performance of the bank,” he said.

The bank is also monitoring the time overdue in loan accounts. Once the account is overdue for 30 days, the bank calls it as A1, for more than 30 days A2, and for more than 60 days, A3.

“We have set up committees of GMs for A2 and A3. They meet twice a week to monitor the accounts,” he said.

Asked about the impact of this system, he said the bank has been able to prevent huge slippages. “The upgradation and recovery that have taken place in the last quarter are much higher than we had stipulated.”

In the first-half of 2011-12, bank made a cash recovery of Rs 250 crore. In H1 of 2012-13, that is, after the introduction of this system, it has recovered nearly Rs 510 crore. “How you become smarter is by getting information real-time,” he added.


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