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Let me explain with a few examples. Let’s say you’re a Tell me a little more about your early warning 10% NPA, which is $5 billion, so just by putting in place a There’s no ownership of the fact that you put them in the
company that’s making losses. It’s not enough to say I’m system where you get say even 1% savings which is very bad bank in the first place. I think it can’t be let go like that
signal (EWS) product in particular.
making losses, it’s important to say how long it’s going to very conservative, it gives you $500 million back and that because it’s public money after all, and discounting is very
Most banks say they had a gut feel earlier… there was a guy
last, which depends on a number of external factors not in in the credit monitoring department looking at different too within three months of installation. So most of what steep when it goes into a bad bank unlike regular stressed
your control. In the Coronavirus case, for instance, it could we’ve spoken of, like quantification of losses, is instant assets. I think there should be a strong pushback on this. It
loans and some cases had payments frequently bouncing.
be about whether a vaccine is found in September, versus payback. Even customers won’t complain about it or look at worked in some scenarios where those weren’t big
That would mean the asset is stressed. Now you have a lot
September of next year: it’s a whole range of theories being more data at your disposal, you have a lot more sense it as a spend. countries like ours. Ours is a completely different scenario
propagated and a lot of that is speculation. So as an investor and I don’t think it’s apples to apples.
coming out of data analytics, etc, which you must use. Let
in a company, or a bank giving a loan to a company, I need And what’s your India share at this point?
me give you an example. Now, RBI came out first with 42
to know if this really lasted a year versus six months versus alerts of which only 28% data came from current legacy See we are the leaders as far as EWS is concerned. Mphasis
six weeks, what are you going to do to stem those losses. partners with CRISIL; none of the others have their own
systems such as loan origination systems, core banking
The business of quantification of losses is a huge thing even product. All of the biggies partner with some of the smaller
system etc. Where is the remaining 72% data coming from?
for the government, forget about companies and banks. For You could say that is coming from the “atmosphere” like the credit providers and deliver it. But for us the product is ours
the government it’s important to know what kind of sectors and the implementation is also ours. Completely end to
web crawlers, credit bureau information etc. For instance,
will make what kinds of losses, and therefore what kind of end.
earlier you could get away with pledging the same collateral
sops will help them come back to normal. Risk, therefore, with multiple banks. But with the credit bureau data fed into
becomes a competitive advantage. I know it’s a strange question to ask during a
an alert, you could say this is the credit bureau data on this pandemic, but where do you see your company in
particular person. And that’s one more means of structured
So what do we do, specifically? I can pick a few things. One the next couple of years, given it’s in the risk
data. We can take clean data even from textual data. Third
is the business of computation of losses, which is expected business?
is, as soon as you put in the name, it goes and checks
loss computation, or ECL. We can tell you this is the kind of In a pandemic situation, people typically will say prepare for
whether they are in the news for the wrong reasons, what
loss you’re looking at given various scenarios, which is very the worst and hope for the best. So we are very much in
kind of corporate actions are there against that, are any
accurate. It’s not going to be lockdown for ever, but even if the prepare for the worst scenario, but hope for the best.
members of the board dumping shares, etc. In case of gut
the situation lasts for a year you would still say these are the So it is more about getting you ready in terms of
feel of a person, if the person moves from the headquarters
things that’ll recover and these are the things that won’t. So quantification of losses, so you can work with the
to a branch, it’s gone. Now people want real-time alerts.
[it’s a] complete strategic analysis of what your losses are, government, and RBI on the respective sops. Even the
The step-change which is coming now is wanting to see
and most importantly a number attached to it, and that’s ministry is going to the industries and asking what do you
things real-time. So you can’t mess with the system.
very important. want from us to get started. You can directly tell them if this
sop is given, we would go under the curve for a while but
Now what they’re saying is banks can set their own
Is this mainly for the nancial sector? recover six months from now. Or if you didn’t give us this,
We are doing it primarily for them right now, because it’s threshold. Like you can say if there are 20 alerts on a guy, we would go down right now. Quantification helps in all
don’t do it. Right now the threshold is left to the banks, but I
like an extension for banks. But having said that, it can be that. We are actually preparing you for the worst with the
don’t think it’ll be that way for long. They are gradually
applicable to any corporate sector. Only thing you need is a hope that you’ll get there much better. And pretty much
few parameters, such as accounts receivable-accounts tightening things. First they said 42, then they said 82 everything—whether it is moral risk, expected
additional alerts which are for the department of financial
payable, data about supply chain disruptions, etc. We will computational loss, EWS... Asset-liability mismatch also we
services (DFS). It’s going in the direction of further
use more of macroeconomic data also… we will look at have a product… how to manage that better, when to say
who supplies to you and who are you supplying to in turn. tightening. yes or no, we are preparing banks for all that.
So we will do the analysis of your company and model this
NPAs are expected to rise sharply after the
to tell you this is the kind of delays and losses you could moratorium on loans is lifted. Is that a business How do you think banks are now looking at risk?
have. Right now we are taking it to a bank because that’s I think banks have always been in a loss scenario, figuring out
opportunity for you?
our client base today. All the rest of the software that we do what to do with their NPAs etc. I was in a discussion with
Absolutely. It’s like a doctor saying they are in business
is with banks, so banks are proactively reaching out and the finance minister a couple of days ago and a lot of
because the patient is unwell. It’s not a good business to be
saying this is how our corporate book looks like, these are different people were asking for changing the NPA
in that sense, but that’s where we are. If NPAs go up, and
our clients and their sectors… We can come back to say classification. I don’t think that’s a solution to the problem.
RBI is tightening the noose, it’s good in terms of adoption of
you have 20% exposure to aviation, 20% to retail, another Now you have the issue with the ‘bad bank’. People want
the business at large not just in India but globally. Secondly,
10% in pharma, so based on how the lending pattern is, we to say it’s no longer my problem, and report numbers
people think it’s a spend, but it’s one of those spends with
can tell you what’ll be the losses fairly accurately. That’s not saying I am healthy. But that problem was created by you.
the biggest payback. Most people think risk is a spend where
subjective, but more objective based on mathematical
it goes as a report to RBI or some authority. But in this case,
sciences.
just by putting a system in place there’s enormous savings
for the bank. For instance if a bank has $50-billion asset size,
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