If I had a penny for each time I heard "lending is easy, but collecting is hard", I'd have enough to start a bank of my own by now. Today, lenders mostly use SMSes as gentle reminders to pay up. Turning up the heat, these are followed by tele-callers and collection agents in case of higher delinquencies. And in doing so, lenders spend over $7 billion on collections / recoveries alone each year. If collection is so hard, why is it that few fintechs have tried to fix it? A crop of collect-tech startups, such as Spocto and Credgencis, burst onto the scene over the last five years. And a few regulations from the banking regulator in 2020 and 2022—aimed at easing the loan burden and reducing collection harassment—stood these fintechs in good stead. So much so that giants like HDFC Bank, ICICI Bank, and Axis Bank have all lined up at Spocto and Credgencis' doors to improve the debt-collection efficiency of loans worth over $40 billion monthly. On the ground, though, collection agents are worried that this efficiency may take a toll on their jobs. After all, one of the best-selling products of these collect-tech companies monitors the collection agents. In our today's well-reported article, maps out how the RBI circulars have panned out for the collect-tech startups, the lenders, and the on-ground agents, and above all, if this clutch of startups can end the lenders' collection lament.
