The recent news of banks auctioning properties and other assets of several high-profile figures to collect their fees 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.
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 an intentional defaulting party and auctioning them off to reclaim full or partial fees is reassuring, 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.
Can asset tracing address the problem of rising NPAs?
A volatile business environment and unethical business practices pose serious business risks to most companies, including banks and financial institutions. 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 bad loans in India was around $ 106 billion as of September 2020, with the Reserve Bank of India (RBI) stress tests strongly suggesting that the bad loans 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 defaulters / borrowers as the generally admissible evidence to negotiate against their NPAs for loan repayment.
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 obtaining information about businesses and individuals from a variety of information sources, both overt and covert, to obtain targeted actionable information.
The focus areas include Skip Tracing & Asset Search, Corporate Investigations & Fraud Advisory, Undercover Operations & Surveillance, Plant Audit & Compliance Support, Investigation & Enforcement Intellectual Property Rights, Due Diligence Analysis and much more.
Framework for an effective asset tracking process
To establish effective strategies to deal with defaulted or bad debts from borrowers or
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 level 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 survey conducted and raw report from investigators to the Asset Location Team
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 to the customer after 3 quality checks
Often times, when a large-scale NPA matter comes to light, the 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 those questions with our hardcore on-the-ground intelligence based on our core principles of integrity, confidentiality and value.
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