Practitioner's Insights On Credit Monitoring

In an industry-first survey on Credit Monitoring Practices of Indian Banks, Bahwan CyberTek highlights the need to take a holistic approach to credit monitoring with organizational ownership combined with an urgent need for automation as well as data integration.

Bahwan CyberTek, a leading global provider of innovative software products and solutions, has launched a report based on India’s first ever survey on ‘Credit Monitoring Practices of Indian Banks’; the report titled ‘Practitioners’ Insights on Credit Monitoring’. This was part of an event organized by the company where industry leaders and practitioners from private and public sector banks shared their experiences, both from a regulatory and a banker’s viewpoint and the latest regulatory developments in the Indian banking system, for credit monitoring. The survey was conducted between October 2016 and February 2017, amongst senior bankers spearheading the credit risk monitoring or are part of the management unit, spread across 25+ public and private sector banks in India of varying asset sizes; this included banks whose total asset size comprised 42% of the combined asset size of all Indian scheduled commercial banks, as of March 2016. Commenting on the launch of the report, Ms. Jaya Vaidhyanathan, President – BFSI & Strategic Business Initiatives, Bahwan CyberTek said, “We at Bahwan CyberTek believe in proactive action as opposed to merely reacting to an action. As a key priority for 2017 and years to come, we think it is important for Indian banks to make full use of the technology which will help automate and therefore improve their credit monitoring techniques, given that the health of our country’s economy depends on it. “This therefore brings about the need for an Early Warning System where bankers can predict and assess the health of a borrower, for instance, and take the necessary measures. Moreover, such a system should help gauge the performance of all critical sectors that contribute towards the growth of the Indian economy”, she added.

Some of the key findings from the survey include:

No bank has completely automated the SMA (Special Mention Accounts) monitoring process.
Banks largely rely on internal data to monitor the borrower health that might cause trouble in the future; the absence/ minimal use of external data (from an availability and quality point of view) doesn’t help in taking sound decisions.
Majority of the responding banks (>70%) see a need for a separate Early Warning System rather than making modifications to the existing systems, and have planned for one.
With regard to reporting, data collection is fully manual for 40% of the responding bank.
- For over 75% of the banks, report generation, dissemination and follow up actions is either fully manual or just partially automated.

Speaking at the launch, T. N. Manoharan, Chairman, Canara Bank, said, “I would like to congratulate Bahwan CyberTek for undertaking this survey. I am sure that the findings will be of immense value to both banking personnel and the BFSI industry as a whole, and I personally hope to be enriched by the insights presented in the report. With regard to the banking industry, the two major challenges faced by the sector in the last one year have been the Asset Quality Review issued by the RBI, and demonetization. However, the banking industry is returning to normalcy, after having faced these hurdles.”