RETAIL LOANS | DEFAULTS, RESCHEDULING AND RECOVERY PROCESS | CAIIB EXAM 2023

RECOVERY OF RETAIL LOANS – DEFAULTS, RESCHEDULING, RECOVERY PROCESS

Candidates can take the Certified Associate of Indian Institute of Bankers (CAIIB) test after passing the JAIIB exam, which is another flagship course by the Indian Institute of Banking and Finance (IIBF). CAIIB’s mission is to assist people in making better decisions by providing advanced information in areas like Treasury Management, Risk Management, Balance Sheet Management, Credit Management, International Banking, and Economic Analysis. One of the most challenging courses for bankers to pass is the CAIIB. However, if you apply our “CAIIB study material,” we guarantee you will pass the CAIIB exam 2023. The CAIIB exam is held twice a year. Candidates must have completed the JAIIB before taking the CAIIB Exam 2023. After talking about the CAIIB EXAM 2023, we would now like to discuss the retail loans, their recovery, defaults, rescheduling, and their recovery process. 

WHAT ARE RETAIL LOANS AND HOW DO THEY WORK?

The term “retail loan” refers to a wide variety of loans. Personal loans, such as car loans, mortgages, signature loans, and credit cards, all belong under the retail loan category, but business loans can also fall under the retail loan category. If a business owner obtains a business line of credit, an installment loan, a property mortgage, an equipment loan, a small business credit card, a microloan, or virtually any other sort of loan for his company, those loans are classified as retail loans.

RETAIL LOAN RECOVERIES

Retail assets are one of the biggest revenue generators in banking. Hence banks aggressively build up their retail asset portfolios to increase their business. Because the customer base in retail banking is vast and diverse, the risk is well spread. Foreign banks’ retail asset portfolios, as well as new-generation private sector banks’ total portfolios, are substantially larger than public sector banks. Previously, public sector banks’ retail portfolios accounted for around 30% of their total assets. While the earnings made by a retail portfolio are appealing, the danger of default is still present. Because retail assets like Personal Loans and Credit Card Receivables are unsecured, the portfolio is more susceptible to default.

Read Also: BRANCHLESS BANKING | CAIIB DIGITAL BANKING

In retail loans, defaults, and rescheduling are common.

The term “default” refers to an event that occurs due to non-payment of agreed-upon payments. Changes in interest rates have been one of the critical causes of default. Repricing occurs according to the reset clause in fixed and variable pricing or floating rate loans. The monthly installments, also known as EMIS, are determined by the interest rate when the loan is taken out and the agreed-upon repayment period depending on the borrower’s servicing capacity. An increase in the interest rate will raise the EMI, which the consumer may be unable to pay, leading to default and NPA.

RESCHEDULING OF RETAIL LOANS

If a consumer prefers to keep his current EMI rather than increase it, the repayment time is prolonged beyond the previously committed payback period. Rescheduling of retail loans is the term for this phenomenon. Rescheduling is most common in retail loans for housing loans, which have a long time and are guaranteed by a mortgage.

Reasons for Credit Card and Personal Loan Default

• Genuine defaults are caused by circumstances beyond the borrower’s control, such as personal setbacks, job losses, unexpected medical bills, etc. The intention to pay is intact in this situation, but the ability to pay is harmed, resulting in defaults. Because the odds of recovery are good, the bank takes a customer-oriented strategy in this scenario.
• Willful defaults occur when borrowers intentionally default, intending to defraud. The banks’ strategy in deliberate defaults will be recovery-oriented.

PROCESS OF RECOVERY

A recovery process is a scientific approach for keeping retail assets in good shape. It is created in such a way that it can deal with both real and willful defaulters. The recovery process for genuine defaulters must be courteous and professional. The recovery process for wilful defaulters should be stringent and professional. The approach to loans taken by ‘public sector banks’ differs from that of private sector banks and foreign banks. Private and foreign banks outsource their recovery process and commit it to Recovery Agents for end-to-end recovery management when accounts become defaulted. PSBs manage retail loans through their workforce.

Now that we are done discussing all the topics, we would like to tell you about the CAIIB STUDY MATERIAL 2022 that we provide, which would help you prepare for the CAIIB EXAM 2022.

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CAIIB STUDY MATERIAL 2023

At IIBF LEARNING CENTER App, the STUDY MATERIAL for preparation for all courses, including ABM (advanced bank management), BFM (bank financial management), RETAIL BANKING, and so on, are available at your disposal. 

We would provide you with notes in the form of epdfs, which would make it easier for you to study and comprehend the subjects for CAIIB 2023. These notes will assist you in revising the entire syllabus of CAIIB EXAM 2023 in a short amount of time while also making the topics easier to understand. CAIIB STUDY MATERIAL 2023 has been specifically intended to make studying much more enjoyable and straightforward.

You can check out our website Learning Sessions for articles, notes related to all the courses including JAIIB and CAIIB, some free study material for them and all the latest updates for the various exams. 

IIBF.INFO is a website listing all our courses JAIIB, CAIIB, Bank promotions, and Certifications. CAIIB EXAM 2023 is one of the most important exams in the banking sector. We provide free notes in the form of epdfs in addition to recorded videos that are only available on our applications and not on our website.  We have two apps for Android users, which are – Learning sessions pro and IIBF LEARNING CENTER, and for iOS users, we have one app called ‘My institute app’ (use code: gegkt) We offer several services, including :

• Video Lectures as well as recorded lectures.
• Complementary Epdfs to help you revise the entire syllabus in such a short time, along with our recorded lectures.
• Mock tests
• Previous year questions.
• Memory recall questions.
• Experienced faculty.
• CAIIB EXAM 2023 latest syllabus is used to update the notes. 
• Case studies are also available.

IIBF LEARNING CENTER will help you out with your preparation and will help you succeed in CAIIB EXAM 2023 on your first attempt.