Credgenics, a debt collection platform, has announced the launch of ChatR, a WhatsApp-based two-way chat solution for debt collections. The solution, a first in the industry, Credgenics said, enables lenders and their empanelled collections team to engage with borrowers in a seamless, cost-effective, and secure manner through a verified business account while keeping the history of conversation intact for future viewing.
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“ChatR can increase borrower engagement rates by up to 2.5 times, with delivery rates reaching as high as 85 percent. The adoption of ChatR for collections can drive an 18 percent reduction in the overall cost of communications with borrowers on an aggregate level,” Anand Agrawal, Co-Founder & CPTO at Credgenics, said while talking exclusively with CNBC-TV18.com.
With more than 500 million daily active users in India, WhatsApp is the preferred digital mode of engagement across the country.
With ChatR, Agrawal said, Credgenics enables banks, non-banking finance companies (NBFCs), microfinance institutions and fintech lenders to enhance their customer reach with a conversational platform beyond non-dialogue based traditional methods such as SMS and emails.
“This solution empowers lenders to engage with loan borrowers in a more convenient and user-friendly manner, always with the borrowers’ consent. It further allows collection teams to respond instantly to borrower queries on WhatsApp, leading to faster resolutions. Using ChatR, agents can share reminders, payment links, and digital notices, while borrowers can share payment proofs and other documents digitally and securely with the agent on the lender’s official WhatsApp account,” he said.
Recently, the Reserve Bank of India (RBI) also issued guidelines and regulations to ensure that the debt collection process is conducted in a dignified and non-coercive manner.
The debt collection market in India has witnessed steady growth due to factors such as increasing levels of consumer borrowing, the popularity of instant loans, increasing focus on collections cost reduction and the presence of non-performing assets (NPAs) in the financial sector.
"The emergence of fintech players has made borrowing and lending processes more convenient and streamlined. Lenders are recognising the need to enhance efficiency in debt collections and are developing tailored strategies to tackle challenges such as high costs, repayment delays, unresponsive customers, and overreliance on manual processes," Agrawal told CNBC-TV18.com.
In order to ensure fair treatment of borrowers and prevent harassment, the RBI also issued guidelines for debt collection practices applicable to banks, NBFCs, and their agents. Failing to meet these guidelines puts them under non-compliance with regulatory guidelines and potential legal issues for financial institutions.
Some of these include:
Furthermore, the RBI has mandated banks and NBFCs to adopt a ‘fair practices code,’ which outlines the standards to be followed during debt collection. This code encompasses aspects such as transparency, customer grievance redressal mechanisms, and communication practices.
