It is about 5 years ago, when I was still a national marketing manager in an MNC auto finance company , I was called for a final meeting with a chairman and younger brother of popular auto group family to hire me to head ‘debt collections’ of their ‘group’ finance company, because of my history for having set right similar problem they had, in the past. This was after a detailed meeting with the company’s Managing Director.
MD was candid to say that customer accounts were in shambles and was not accurate. There were huge complaints; many bad customers took inaccuracy as an excuse and did not pay. Even many good customers did not pay; either there were angry as they were called delinquent or some shrewd customers among them wanted to ‘wait and watch’. There was no record repossessed vehicles; parked mostly in parking lots of bus and railway stations.
Briefly, delinquency rates were very high. I was to bring it under control. I was asked as to what should be the right - meaning 'optimum' - delinquent rate for two wheeler finance portfolio. I had no idea; I made only a guess based on my collection experience in the past for car finance portfolio (and the best that we could achieve ever was to bring it to a level of about 5 %.) and I was careful to say 10%. MD said that the delinquency rate for his company was in excess of 20% and my estimate was that it would have been around 30%. Neither had he any clue to accuracy, nor anybody else in the company.
I saw a big challenge. I was asked whether I could bring it down to 10% in a year. I said ‘Yes”. I was confident.
I was asked to meet the chairman. The chairman himself and his office were charming. He obviously knew a lot of jargons which western banks and MNCs use. He must have been educated in one of the high rated US University, so was his lingo. I was hired at double the current salary then and was asked to pick up the appointment letter.
The guest house ambiance and food were very good; HR manager met me in their guest house and handed over the appointment letter with the following advice.
“ Logi, we did a lot of background checking on your abilities; we were impressed. You not only did best of collections but also innovated many new ways of applying ‘marketing’ to collections. You have continuously given feedback to credit department to improve credit quality and underwriting process. It is good. But….” He continued.” But, you will not do anything like that here. You will do your best in correcting and collecting . We will not require your feedback on credit policies. Credit will not improve because we need to push our two wheelers to emerge as leader”.
I could not have been more shocked. I always loved to say ‘ Best of Collections will not solve delinquency problem, but best of Credit may’.
While I was walking out of the guest house, I saw their fixed deposit application with AAA – highest safety credit rating!!; I do not remember the credit rating agency’s name. No money for any guess here; I choose not to join them.
MD was candid to say that customer accounts were in shambles and was not accurate. There were huge complaints; many bad customers took inaccuracy as an excuse and did not pay. Even many good customers did not pay; either there were angry as they were called delinquent or some shrewd customers among them wanted to ‘wait and watch’. There was no record repossessed vehicles; parked mostly in parking lots of bus and railway stations.
Briefly, delinquency rates were very high. I was to bring it under control. I was asked as to what should be the right - meaning 'optimum' - delinquent rate for two wheeler finance portfolio. I had no idea; I made only a guess based on my collection experience in the past for car finance portfolio (and the best that we could achieve ever was to bring it to a level of about 5 %.) and I was careful to say 10%. MD said that the delinquency rate for his company was in excess of 20% and my estimate was that it would have been around 30%. Neither had he any clue to accuracy, nor anybody else in the company.
I saw a big challenge. I was asked whether I could bring it down to 10% in a year. I said ‘Yes”. I was confident.
I was asked to meet the chairman. The chairman himself and his office were charming. He obviously knew a lot of jargons which western banks and MNCs use. He must have been educated in one of the high rated US University, so was his lingo. I was hired at double the current salary then and was asked to pick up the appointment letter.
The guest house ambiance and food were very good; HR manager met me in their guest house and handed over the appointment letter with the following advice.
“ Logi, we did a lot of background checking on your abilities; we were impressed. You not only did best of collections but also innovated many new ways of applying ‘marketing’ to collections. You have continuously given feedback to credit department to improve credit quality and underwriting process. It is good. But….” He continued.” But, you will not do anything like that here. You will do your best in correcting and collecting . We will not require your feedback on credit policies. Credit will not improve because we need to push our two wheelers to emerge as leader”.
I could not have been more shocked. I always loved to say ‘ Best of Collections will not solve delinquency problem, but best of Credit may’.
While I was walking out of the guest house, I saw their fixed deposit application with AAA – highest safety credit rating!!; I do not remember the credit rating agency’s name. No money for any guess here; I choose not to join them.
