Sanjoy Sen - Gulf News - On Collections - May 2009
GULFNEWSTUESDAY,MAY19,2009Banks urged tobolster collectionsin times ofcrisisLoan default potential to rise amid slowdownBy RACHNA UPPAL ~~ CollectionsStaffReporter _has to be atDubaiThe slowdownin the the top ofglobal economy and its im- . .pact on the region has in- the orgamsatIOncreased the need.for banks chart. Collectionto strengthen theIr budgets.. .for collections and proce- IS a SCIence ...WIthdures as the potential ~or different tools andloan defaults 1Ocreases, 10-dustry insiders say. techniques to collectThe current environment "has also brought into focus money.the need for credit bureaus,allowing banks to cross- SanjoySencheckthe credit historyof Consumerbankinghead,Citibankpotential customers. Ac-cording to Sanjoy Sen, theconsumer bank head for through an analytics-basedthe Middle East region at risk assessment including,Citibank, now is the time but not exclusively, collec-for the normally discreet tions scorecards, autodial-collections and recovery ers (which increases thedivisions of a bank to be number of calls that can begiven more prominence. made to customers without"Collections has to be at the need for direct callers),the top of the organisation and an assessment of whichchart. Collection is a sci- customers have a tendencyence... with different tools to skip on payments.and techniques to collect However, the lack of a re-money," Sen said on the side- liable credit bureau agencylines of the Cards Middle in the UAE is an enduringEast conference in Dubai. obstacle for banks which"The whole thing about needs addressing, andcollections is you have to makes loan recovery in thisbe early in the game," he region more challenging.added. .The ease of credit avail- Moderating exposureability in the last few years "As an.9-when you buildhas resulted in consider- a credit bureau, it takes onably high debt to income ra- the role of moderating thetios. These refer to the level level of exposure," Sen said.of income per month which At a federal level, onlygoes towards repaying debt. the Central Bank providesNow, job losses and salary data on credit history in the -freezes, combined with a UAE and that too on loanstightening credit market, of more than DhSOO,OOO.are contributing to difficul- On March 10, the Federalties in loan repayments. National Council in the UAE"I think banks will see a approved a draft law whichrise in credit losses - the proposed the creation ofindustry has seen a rise, but a federal credit informa-it is not excessive. 1 think tion company, to reduce thebanks are in good financial number of unpaid loans andhealth but there has been a help financial institutionsreduction in credit growth, . makelendingdecisions.which is normal," says Amp At the emirate level,Mukhopadhyay, group head Dubais Department ofof retail banking at Abu Economic DevelopmentDhabi Commercial Bank. (DED) established Em-According to Sen, co 1- credit in 2006, an inde-I lections ,departments can pendent credit informationpreempt such difficulties company.