Leverage Bharat Bill Payment System (BBPS) Platform for collection of Retail Asset Loans instalments

          It is time for NPCI to focus on BBPS. There have no major improvements on the BBPS platform, with no new category of billers being added in the recent past.

          AS BBPS is already integrated with UPI, BBPS Volumes will zoom with addition of new biller categories.

          One evergreen biller category is collection of Loan EMI installments.

          Already NPCI is promoting collection of Loan EMI installments through the UPI Collect Feature @https://www.youtube.com/watch?v=_rcGipEa7jk. 

This feature is gaining traction amounts Banks and Loan companies to collect the EMI Installments with minimal hassles.

          The next step should be to move the collections portfolio to BBPS.

          This will increase the efficiencies 

The preferred channels for collection of Retail Loans Installments is Cheques of other banks/Direct Debits to Bank  Accounts/NACH Debit/Cash/Online Aggregator Platform i.e Billdesk etc

Note: Loan instalments are Bills raised on the Borrowers as per the billing cycle

Sr No	Collection Channel	Limitations
01)	Cash Payments at respective Bank / Finance counters	Cash can be collected during banking hours, on bank working days, at bank counters only. This reduces the window for cash collection.
	Cash Collection by Recovery Teams	Cash has to be moved to bank recon accounts, increasing the costs and TAT of loan recovery
02)	Cheques	Elaborate recon process, chances of cheque bouncing, late return etc
03)	NACH _ Debit	Not suitable for adhoc recoveries, challenges in handling ‘Returns’.
04)	Auto Recovery through debit to respective bank SB/CA/OD Accounts	Beneficial only when borrowers open accounts with KMBL and maintain adequate balances
05)	Online Aggregator – EG: BillDesk @ https://payments.billdesk.com/MercOnline/KotakEMIController	Restricted to few banks only

A new collection channel is available for lenders in India now. This channel aims to minimise the friction associated with collections and improve the recovery levels.

This channel has a large number of contact points for payment of the Retial Loan installments

This channel has Digital touch points as well as Physical touch points for payment of Retial Loan installments.

There is NIL probability of repayments getting credited to wrong Loan Account Number ie. APAC Number, pilferage of cash, late return.

Through the digital channel, customers can repay their loan instalments 24*7, 365 days a year, with respective banks/finance companies Chatbots to assist them. Chatbots  assistance is optional.

The channel is The BBPS Platform developed by NPCI

Benefits:

01) 144 Banks are LIVE on UPI Platform as issuers i.e Loan Instalments can be collected digitally from 144 bank account holders instead of few banks account holders through Billdesk or other aggregator channel model.

02)                  Over 1,00,000 physical touch points all over India for physical bill collection  through the BBPS Platform i.e Recovery teams

03)                  No tension even if the borrower closes his/her bank account to avoid Cheques / NACH Debit transactions.  The borrower can pay through cash at physical touchpoints.

04)                  Once successful, this can be marketed as a new Collection Products to corporates.

05)                  Both the fixed and free collection product can be offered.

06)                  Loan holder need not worry about wrong credits

Challenges:

No visible challenges.

Costs: Minimal costs to Go Live as the basic requirements are in place. The APIs associated with Billdesk can be deployed for BBPS Integration with minimal cost and minimum changes. 

NPCI in consultations with stake-holders to arrive at the MDR for a win-win situation.   

Let us leverage the vast BBPS channel to reduce collection costs