Fintechs set for change

Their business models and funding may be affected as norms for debt collection practices are updated, reports Raghu Mohan

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The Fintech Association for Consumer Empowerment’s (FACE’s) rollout of debt collection norms breathes life into Mint Road’s self-regulatory organisation (SRO) framework.

The norms’ impact will be felt in governance, agent conduct, borrower disclosure, data protection, and safeguards for digital and field recoveries. They will also shape the work of shadow banks, lending service providers (LSPs), and collection-tech firms. Stricter collection protocols mean you can’t push credit as in the past (its return leg has to be taken into account); business models may have to be tweaked even as fintech funding heads southwards.

So, how are we to read FACE’s moves and the fall-outs in store?

“We draw attention and recognition to the symbiotic connection between debt collection and access to credit,” says Sugandh Saxena, chief executive officer (CEO) of FACE. As she sees it, “a robust collection process helps lenders to serve segments with unstable income and reduce delinquencies: it positively improves their access to and cost of loans and credit discipline.”