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Jan 16th
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Home Technology India NPA reporting through system based approach tightens loopholes

NPA reporting through system based approach tightens loopholes

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NPAs continue to be a grave area of concern for the banks and regulators. The recent Financial Stability Report points out a 25.5% growth in NPAs in the first half of 2011-12, the highest in the past six years.
RBI's Deputy Governor Subir Gokarn attributed it to the migration of NPA calculation from manual reporting to an IT system-based approach.
"Manual system, due to lack of visual ease, involves going through scores of ledgers, manuals etc. Due to lack of scope for verification this gives leeway to banks to show a rosy picture about the financial numbers. On the other hand, software based system gives a single window view of the lifecycle of the loan from the day it is disbursed. This avoids manipulation of any kind and ensures complete transparency," 
explains R.B.Barman, Former ED- RBI.
IT system based approach has many advantages. It provides transparency and reducing the cost of NPA management. It will improve productivity by managing set processes on rule-based systems. This system also requires lesser hiring of manpower.
Both the finance ministry and RBI have directed Indian banks to automate NPA management and eliminate manual intervention. Moreover the implementation date for BASEL III norms is around the corner. Indian banks should abide them between 2013 and 2019.
Recently, Indisoft Consultancy has launched an Indian version of its NPA management product, i.e. 'Rx Office NPA'. "After implementing Rx Office NPA there is seamless bidirectional data transfer between the CBS and Rx Office NPA eliminating manual intervention. It has benefited in terms of regular tracking of the lifecycle of default. Meanwhile, the Finacle system is also updated accordingly so as to provide an end-to-end view from the loan disbursal date to the latest update of loan default," explains Sanjeev Dahiwadkar, CEO, Indisoft LLC.
Cosmos Bank has provided the business knowledge and regulatory know how for designing the product. "The team from Cosmos gave insights of business services from a co-operative bank perspective. Working with the Cosmos team enabled us to design the product from a user angle," shares Nagool. The bank is also using the product for their NPA management. "Rx Office NPA will help banks to reduce their NPAs to a great extent," 
states Sunil Sabnis, Director- Cosmos Co-operative Bank.


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