major industry wise checkpoints for Business Model of clients. The above parameters are hardly taken care of by the bankers. The facilities and limits are decided upon by fixed templates provided by their back office. Another most influencing agent in their decision making happens to be the target for the month/quarter. The visit to debtors and physical verification are often compromised. Thus the huge increase in NPA of 45 per cent in non-performing assets and 69 per cent increase in problem loans linked to commercial activity and commercial real estate was not only due to macro economic reasons. [Samantha Pearson, 2010] Post Sales Issues: The lending institutions employ relationship managers for handling each customer separately. All efforts are taken to retain them. But often this relationship is based on the amount of business they bring to the company. Seldom is the customer profiling done on the basis of risks they pose and taking dynamic inputs from the relationship managers. In troubled times this becomes increasingly important. The recovery teams often increase the customer follow up exercises which becomes counterproductive. The proposed strategy is to target different cases based on distinct strategies for them. Strategizing a recovery process is paramount and would aid the recovery process. The customer profiling should be done based on two parameters: Commitment from customers and Co-operation from customers. These are most pragmatic parameters to be used by recovery agents to understand their clients and differentiate cases. The customer is positioned on the below plot based on their co-operation level and actual commitment shown in making payments. Co-operation from customers includes their readiness to meet the bankers; share the data regarding their debtors and on-going business conditions and reinforce seamless communication amongst the company, its debtors and the bank. Commitment from customers is evaluated by the extent to which timely payments are made, as agreed upon. The judgments on these parameters should reflect the current state of the asset for the bank. Profile and track record of the customer can also be considered for this assessment. Before categorizing the customer, the recovery team must have some experience with the customer or should have sufficient data justifying the co-operation & commitment levels. The customer follow-up and recovery agent’s approach should be based on customer’s relative position on this grid. Timely review of companies can be taken to ensure change in position and thus change in strategies.
Customer Profiling Grid:
Anup Kumar Ray Class of 2013 PGDM, K J Somaiya Institute of Management Studies, Mumbai
FINANCE
Issues in Pre- and Post-Sales in Lending Institutions
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