This issue of Non-performing assets (NPA) is likely to get worse due to the overall economic slowdown impacting most customer segments across banks’ portfolio like MSMEs (micro small and medium enterprises), large corporates, and agriculture to name a few.
Although we believe there are a number of gaps in the current credit capabilities of Indian, Continental European and Latin American banks, the matter needs to be approached in a phased manner by focusing on a select few capabilities initially.
Some of the capabilities that should be prioritized include:
External data acquisition for credit assessment models
Early warning framework and collateral management for credit monitoring
Soft landing and care programs for default management
Centralized recovery and collection.
Through multiple engagements across large global banks, Accenture believes that implementing an early warning solution (EWS) can help substantially reduce banks’ NPAs.
Accenture’s five step approach combines a bank’s existing and new data sources within a strong analytical framework, and helps banks develop a custom approach that is specific to their portfolio needs.