Can India’s collect-tech startups turn bad loans into good business?

While technology has made credit disbursal in India an increasingly frictionless process, the collection side of the business is still mired in the dark ages. Intimidation, threats, and persistent follow-ups are rampant, leading to distraught and often uncooperative customers. 

Lenders, too, bear a heavy cost. According to industry estimates, the physical collection process can account for as much as 60% of the equal monthly instalments (EMIs) owed by borrowers. As a result, lenders often choose to cut their losses on overdue small-ticket loans rather than spending to recoup them.

For Spocto, this archaic system presents an opportunity. It enables lenders like banks and non-banking financial companies to assess the risk profiles of their customers and optimise collections. As Spocto co-founder and CEO Sumeet Srivastava puts it, the easiest way for a lender to lose a customer is to pass the account on to its collection department.