Banks look at big data for loan recovery

Several companies including IT, retail and FMCG rely on big data to detect fraud and improve productivity

With bad loans in the banking system ballooning, lenders are now looking at using more innovative ways such as big data to tackle the problem. At the two-day retreat held in New Delhi, bankers suggested to the Reserve Bank of India (RBI) big data should be used for fraud detection and easier and quicker sharing of information among different lenders to curtail the problem of bad loans in the system.

"At the moment, even though there are ways by which information amongst banks is shared, we are now looking at using big data for risk management and loan recovery purposes. At the Gyan Sangam, we have made a recommendation in this regard to the finance minister," said one of the bankers who was a part of the risk management committee at the retreat.

Several companies in the country, including digital companies and those in IT, retail and FMCG, have been relying on big data for fraud detection and improving productivity. The focus by the banking sector on using big data comes at a time the banking regulator has been nudging public sector banks towards increasing their reliance on technology.

Another banker present at the Gyan Sangam said RBI Governor Raghuram Rajan, in his address to the bankers, had said the lenders should be relying more on technology and digitising their different processes to increase efficiency. Even earlier, the regulator had told banks to make use of technology such as big data for better understanding of consumers. However, banks are now also looking at it to improve the health of the balance sheet.

Apart from this, to tackle the problem of bad loans, banks have also made recommendations to ensure the tightening of the debt recovery tribunal (DRT) to ensure a speedier process. "Currently recovery via the DRT process takes a long time so we have asked for tightening of the norms to make the process efficient," said one of the bankers quoted above.

This comes at a time when the burden of non-performing assets in the banking system is estimated to be around Rs 8 lakh crore.

Finance Minister Arun Jaitley, at the concluding press conference at the Gyan Sangam, had said to deal with the system of stressed assets, which was at 11.5 per cent of the total assets, the finance ministry is already working on strengthening the DRT rules and is already at an advanced stage.