Page 26 - Banking Finance February 2018

ARTICLE

from 4.9 percent to 4.4 percent respectively during Reports and information on social networking sites help
September 2016 to March 2017. These improved figures them a lot in finalizing the credit score and calculating the
clearly indicate that NBFCs are impressively effective in the associated risk factors.
exploitation of their resources despite a double-digit annual
growth in the balance sheet of 2016-2017. Moreover, the highly automated process brings down the
entire turnaround time for disbursing a loan from customer
Factors responsible for decreasing NPAs enquiry to money transfer. Apart from this, most of the
NBFCs take post-dated cheques from their customers as
One of the most valid reasons that enable NBFCs to optimise
security instrument because every loan seekers know that
their assets is the intelligent selection and execution of the
cheque bouncing is a crime and strict actions can be taken
digital technology, they have learned a lot from the 90s
against the deliberate offence.
debacle and bounced back with practical implications of the
technology to ensure a better journey in the financial system
of India. Add-on benefits
But, technology is not the only factor that helps NBFCs in
Today, a majority of NBFCs uses Artificial Intelligence, minimizing the NPAs, there are various other structural,
Pattern Analysis, Predictive Intelligence and other operational, and strategic incentives also that enable them
customized algorithms to study the repayment behaviour to curtail the ratio of NPAs. Conventionally, NBFCs avail 50
of the potential customers. These technologies help them percent funds as market borrowing and the rest 50 percent
to completely assess the credibility and financial status of they acquire from banks.
an individual that decides his/her credit score. They disburse
the loan to people with good credit score and complete This kind of practice makes funds cheaper for them. Another
verification. important point here is that usually, Owners-Managers have
real stakes in the company which saves them from the
Through strict underwriting process, NBFCs make a detailed unnecessary pressure of the external stakeholders and allow
check of loan seekers profiles and credit history and process them to make quick decisions. Hence, advanced technology,
transaction related documents digitally and perfectly. Real- focused approach, and more autonomy are the factors that
time bank statement, Pan Number & EKYC check, Bureau have leveraged the NBFCs in minimizing the NPAs. T

Price Waterhouse banned for 2 years in Satyam case
Sebi banned Price Waterhouse Network from engaging in audit work with any listed company for two years starting
April 2018 for its role in the Rs 8,000-crore Satyam scam that took place in 2009. Sebi also asked PWC to pay Rs 13.09
crore, along with interest at 12% per annum from January 2009 (approximately Rs 14 crore). Two former PWC part-
ners, S Gopalakrishnan and Srinivas Talluri, have also been barred from issuing audit certificates to listed companies for
three years. The two chartered accountants were responsible for auditing Satyam when the fraud came to light. Price
Waterhouse Network is auditing arm of PWC India. "Listed companies and intermediaries registered with Sebi shall not
engage any audit firm forming part of the PW Network, for issuing any certificate with respect to compliance of statu-
tory obligations which Sebi is competent to administer and enforce, under various laws for a period of two years," the
order said. The Sebi ban will come into effect from financial year 2018-19 and won't affect the auditing work for the
year 2017-18.

Bankruptcy amendment bill gets Parliament nod

The Parliament gave its nod to amendments to the insolvency and bankruptcy code that aims to keep defaulting pro-
moters out of the resolution process of insolvent companies. The Insolvency and Bankruptcy Code (Amendment) Bill
2017 was passed by Rajya Sabha amid concerns that the changes could bar genuine domestic investors from the reso-
lution process. Separately, the Insolvency & Bankruptcy Board of India removed the requirement for disclosing the liq-
uidation value of an asset undergoing resolution.

26 | 2018 | FEBRUARY | BANKING FINANCE

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