Recent news of banks auctioning properties and other assets of several high-profile figures to collect their debt due to loan defaults would have led many people to wonder why these people are not paying off their loans by selling their assets themselves. However, the reality is not that simple; in fact, many unscrupulous defaulters go to great lengths to hide their assets in order to claim amnesty.
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On the other hand, banks go out of their way to investigate how the loan money was spent and whether it was invested in obscure or hidden assets, and rely on experts to carry out what is known as “asset tracing”.
While the idea of tracking down the hidden and exposed assets of a deliberate bankruptcy debtor and auctioning them off to reclaim full or partial fees is comforting, the real challenges become in implementation. It is not an easy task to identify the assets of the defaulting party, which can be located both at home and abroad, to deal with different legal systems with different liquidation rules and regulations, and to bring everything to a successful settlement.
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Can asset tracing address the problem of rising NPAs?
A volatile business environment and unethical business practices pose serious business risks to most businesses, including banks and financial institutions today. The ongoing COVID-19 crisis has only made matters worse as the level of defaulted debt in the country continues to rise at an alarming rate. In fact, the total amount of non-performing loans in India was around $ 106 billion in September 2020, with the Reserve Bank of India (RBI) stress tests strongly suggesting that the non-performing loan ratio will rise to 13.5% by September 2021, from 7.5% a year ago.
This has created a growing need for viable single-track asset and key solutions that serve as key factors in formulating bad debt management strategies. The findings from such solutions serve the plaintiffs vis-à-vis the defaulting party / borrower as the fundamentally admissible evidence in order to negotiate the loan repayment against their NPAs.
Various solutions / services on offer
Risk consulting firms like Lancers Risk Consulting offer their clients from various sectors high quality, customer-oriented and successful actionable intelligence and risk mitigation solutions. Solutions include extracting information about businesses and individuals from a variety of information sources, both overt and covert, to obtain targeted actionable information.
Key areas of focus include skip tracing and asset searching, corporate investigations and fraud advice, covert operations and surveillance, factory inspection and compliance support, intellectual property investigations and enforcement, due diligence analysis, and more.
Framework for an effective asset tracking process
In order to establish effective strategies for recovering defaulted or bad debts from borrowers or defaulting debtors, a well-defined design is essential.
With a very experienced operational team of 120 professionals spread across the country, everything from training to execution is carried out in-house, ensuring the highest levels of confidentiality and data protection for customers. In this regard, we recommend a robust five-step framework to create a concise asset location solution for our clients.
Step 1 – Adequate due diligence on the applicant’s case by the Business Intelligence (BI) team
Step 2 – Result of the due diligence and detailed case analysis made available to the investigation team
Step 3 – Field investigation carried out and rough report by the investigators to the site team of the plant
Step 4 – Interim report sent to the customer and based on the customer’s feedback, further investigation
carried out – Proof of documentation obtained
Step 5 – Final report sent to the customer after 3 quality checks
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Often times, when a large-scale NPA matter comes to light, promoters are the first to be suspected of having siphoned the money. You are innocent until proven guilty and we at Lancers help you find the truth behind these questions with our hardcore on-the-ground intelligence based on our core principles of integrity, confidentiality and value.
Brand Solutions is a sponsored post marketing initiative. No VCCircle journalist was involved in creating this content.
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