Kotak Mahindra Bank - BBPS real-time integration for recovery of Overdue Loans

 

            Two recent Press Releases by Kotak Mahindra Bank caught my attention.

Press Release 01) Missed an EMI Payment on Your Kotak Loan? Now, Simply Pay Your Overdue EMI Through Your Preferred Payment App @ https://www.kotak.com/content/dam/Kotak/about-us/media-press-releases/2021/media-release-kotak-overdue-loan-repayments-on-payment-apps-742021.pdf

 

Press Release 02) A Simple but Powerful Message – Kotak Home Loans @ 6.65% p.a. Kotak Launches Multi-media Campaign on its ‘Unbelievably Low’ Home Loan Rate  @ https://www.kotak.com/content/dam/Kotak/about-us/media-press-releases/2021/media-release-hl-campaign-6-65.pdf

 

Press Release 02 focuses on Loan disbursements, Press Release 01 focuses on recovery of Loan overdues.

            Both the activities are bread and butter for any lending financial institution. Both are interlinked for the continuous growth of a lending financial institution.

            BBPS has revolutionised the way for collection of Loan EMIs including overdue EMIs.

            There are few parallels for BBPS in other countries. In majority of the countries there is a fragmented approach for collection of loan EMIs.

            The benefits of BBPS are many and it is very welcome that the numbers of the Billers on the BBPS platform is on the increase.

Q: Why the Press Release 01 is important?

            Kotak Mahindra Bank has real-time integration between BBPS and its Loans module. What the BBPS displays as Amount Due for a particular loan, is the real-time amount. There is no time lag i.e Start of Day balance, or 1-day old balance, or holidays not calculated etc.

            This is a great innovation that drastically reduces customer friction. 100 % assurance for customers, that only the correct overdues are being repaid.

            Customers can choose to pay the full displayed due amounts or part amount. There is no necessity that only the full due amount has to be paid.

            This reduces the pressure on the loan borrowers to pay the full amount. The borrower can repay in small amounts as and when required.

            The payments made via the BBPS channel will reflect in real time in the respective loan accounts.

            This means repayments made on holidays and after banking hours will reflect immediately in the loan account. The issue of delayed accounting is history now.

            BBPS channel is open 24*7, 365 days a year.   

 

Quote

Details of any EMIs that are past the due date will be displayed and the payment will reflect in the

customer’s loan account on a real-time basis.

This repayment facility is available on all KMBL terms loans such as Personal Loan, Home Loan,

Consumer Durable Loan, Business Loan, Gold Loan, Loan against Property as well as Commercial

Vehicle Loan, Tractor Finance Loan, Construction Equipment Loan etc.

Unquote

            At present, Kotak Mahindra Bank offers a real-time facility for overdue EMIs only and not for regular EMIs. Lots more system integration is required for a real-time facility for regular EMIs.

A start is made, and the day is not far off when there will be a real-time facility for regular EMIs. This will be another game-changer for the loan recovery process in India.  

 

Q: What are overdue loans?

Ans: Overdue loans are loans in which borrowers have missed to repay a particular EMI.

Q: What is the traditional collection process of overdue loans?

Ans: NACH(Debit), NEFT, Cash, 3^rd party aggregators

Q: What are the drawbacks of the traditional collection process of overdue loans?

Ans: DB 01) High collection costs

DB 02) Delayed reflection of repayment in the loan account

DB 03) Difficult to see the total missed EMIs amount          

DB 04) Difficult to repay part amounts

DB 05) Difficulty in interpreting narration in customer’s accounts at a later date

 

The BBPS channel can be deployed for collection of overdues in the following loan segments i.e Home Loans & LAP, PL, BL, and Consumer Durables, Credit Cards, CV/CE, Agriculture Division and Tractor Finance

 

Disclaimer: These are my personal views only. The bottom line is Mission #LessCashNotCashLess. Nothing More - Nothing Less

 

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Kotak mahindra bank has gone live on imps using account no and ifs Code

            One unique feature of Kotak Mahindra Bank, is that it does not have an independent internet site. Rather, Kotak Mahindra Bank website is a part of Kotak.com

The dedicated internet page tells us more about Kotak Bank’s IMPS offering.  

The special offers internet page is a very useful tool for Kotaks’ customers to enjoy the best of Kotaks’ offers on its debit cards, credit cards and netc@rd. Netc@rd  is a single use limited validity online card created by Kotak customer, from his/her  bank account, at the time of online shopping and cannot be used after your first payment.

Ah, you might be interested in Subbus’ tv advertisements, on the theme, ‘lets money simple’. View them to lift your blues.

Who will be the major client of Yes Bank IMPS-MPS?

IMPS-Merchant Payment Service pilot launch with Yes Bank

            Yes Bank was one of the banks who were in the Pilot Launch of IMPS in November 2010. Taking this tradition forward, Yes Bank has also joined the Pioneer Club for the IMPS Merchant Payment Service.

            Yes Bank joined the IMPS Merchant Payment Service last month i.e August 2012. With this, Yes Bank would now be able to offer this new ePayment mode to their ‘Cash Management Services’ clients.

IMPS-MPS will be beneficial for Accounts Receivables more than Accounts Payables teams.

            HSBC, State Bank of India, Canara Bank, ICICI Bank, Kotak Mahindra Bank, Union Bank of India are the banks which are already online with IMPS-MPS.

            State Bank of India’s’ major client is IRCTC. HSBC’s major client is Reliance Mutual Fund. With reference to other banks, at present, no information is available in the public domain.