Client Situation
Our client is an Indian subsidiary of a German multinational bank and financial services company. Established itself in the Indian market in 1980, the bank is a fully integrated financial services provider to Indian corporate, institutional, and individual clients. The client was facing a high delinquency in its credit card portfolio. The changing, uncertain economic environment resulted in the bank needing to optimize their collections and recovery framework. In this project, Cedar worked with the client to identify opportunities for enhancing its collections framework.
Cedar’s Approach
In this program, Cedar was mandated to help the client develop a best-in-class collections and recovery framework.
- Developed a strong understanding of DB’s current collections portfolio and processes identified reasons for low collections.
- Reviewed the regulations, models used by leading banks and benchmarked against best practices.
- Conducted 20 external interviews across banks, BPO’s and collection agencies and 11 internal interviews within the client bank.
- Conducted a gap analysis, identified, and listed areas of improvement and determined their financial impact.
- Ran an external assessment to gauge best practices on a regional and global level.
Outcome
This program resulted in the suggestion of measures in the areas of collections framework, process delinquency, and process and efficiency to optimise collections and recovery framework.
- Assisted the retail banking division to assess the unsecured lending business, from a collections framework perspective.
- Recommended a review of the overall collections model including key decisions like managed outsourced vs subsidiary or the introduction of a special team for card collections.
- Suggested the introduction of a debt restructuring scheme with potential strategic benefits at approximately INR 75mn.
- Identified 12 key measures for tracking across collections, process and efficiency and delinquency control.
- Recommended an overhaul of the credit program and policy to ensure delinquency control.
- Identified a review of the overall allocation and prioritisation process amongst other key areas to be important to ensure process efficiency.