debt collectors

Risk & Reward: A Collection Agent’s Perspective

India’s financial sector has encountered numerous challenges and continues to suffer in the face of an unstable economy.

Following demonetization, the government closed all loopholes for black money earning and circulation. This results in tight accounting proof underlying every single transaction.

As the liquidity situation worsened, many enterprises were forced to slow operations.

Add in the fact that GDP growth slowed to 4.5 percent in the second quarter of 2019-20. Last year it was to 7.1 percent.

Due to the rising interest rates, all of this has resulted in delayed debt recovery.

Many accounts are becoming Non-Performing Assets (NPAs), putting pressure on lending institutions.

With these realities in mind, it is evident that financial institutions cannot afford to write off bad debts or overlook consumer experience. Even a small reduction in loss rates for big customer portfolios can lead to considerable and recurring credit loss reductions.

The Collections and Recovery process of a financial institution focuses on maximising return on investment by lowering unpaid loans and managing traditional credit risk, as well as profitability variables including client retention and resources.

Here are a few current rewards and risks affecting debt collecting operations:

1. Regulators are increasingly focusing on collection functions.

Banks have enacted one of the most significant measures to audit, monitor, and manage the risks posed by third-party debt collection firms.

2. Every action that impacts a consumer is expected to be overseen and controlled by banks (both state and federal)

For the agencies, this means more expenditures from connecting to the banks’ monitoring systems and reporting solutions, as well as more time and effort spent responding to audit questions and training personnel on compliance procedures.

The Department of Financial Services (DFS) of New York has created its own debt collection regulations.

What this means for collectors is that they will need to adapt to changing regulatory standards and expectations.

They are likely to be involved in time-consuming, onerous, and expensive IT enhancements or face the repercussions of gaps in compliance and governance if they are saddled with sophisticated and rigid programmes that cannot be customised at a business level.

Current debt collection systems are ineffective, because they consist of a number of fragmented apps with no integration.

Debt collectors lack centralised operational management and unified data portals, resulting in data discrepancies, information loss, duplication of efforts, and expensive operating costs.

Collectors must pay for the upkeep of these systems as well as the training of IT personnel to administer this sophisticated infrastructure.

3. Debt collection firms fail to categorise customers effectively and offer adequate flexible payment options.

Even if consumers are segmented and payment arrangements are made, they are ineffective because they are reliant on the debt collector’s expertise and experience rather than intelligent segmentation based on large amounts of historical and current customer data.

Instead of using suitable collection tactics, many collection agencies try to resolve the debt by settling for a lower payment or foreclosing the loan by seizing an asset.

4. Collectors do not currently have the tools they need to reduce delinquency rates and keep borrowers as customers.

First and foremost, delinquent borrowers are valued consumers.

Customers, particularly those in early-stage collections, are known to easily recover after a minor setback or to have other accounts in good standing.

Collection professionals are unable to make timely choices or provide customers with the best suitable solution and clear delinquent accounts without a consolidated full view of the customer’s relationship with the bank.

5. Debt collection officers unintentionally approve different agents to engage with the same consumer due to a lack of a consolidated borrower-centric approach.

Customers are frustrated by repeated aggressive calls from different agents, and the risk of poor customer service being rated and communicated to the general public via social media is fairly high. And there’s a good chance the customer may transfer loyalties in quest of a better customer experience.

“Today’s debtors have several products, multiple channels, and multiple debt commitments.
They want fast access to products and services that is seamless and frictionless.”

Interruptive calls turn them off, and recurrent contact frustrates them.

When they are ready, they prefer to speak with an agent.

Furthermore, the FDCPA forbids the use of threatening or repetitive phone calls to individual borrowers. Given client behaviour and preferences, as well as the reality that one of the largest expenses for lenders is manpower, self-service solutions are becoming increasingly popular.


Debt collection is a physically and emotionally demanding task. You must, however, follow these guidelines to become a successful debt collector. The only way to make a payment on your debt is to understand and work with your debtor. You cannot be an effective debt collection agent if you allow your emotions to govern you. As a result, instead of being reactive to the circumstance, take a more proactive approach.

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