Skiptracing-Role of Social Media in Recovery

September 20, 2018 admin 0 Comments Locate Plus, Skiptracing Works, Social media

…..And I sincerely believe that banking establishments are more dangerous than standing armies at the borders…..

-Thomas Jefferson in a letter to Secretary of US treasury in 1802

Thomas Jefferson was an American Founding Father who was the principal author of the Declaration of Independence and later served as the third President of the United States from 1801 to 1809.

It has been over 200 years since these words were expressed yet they still are not only relevant but aptly define the status of banking industry in India as on date. Banking institution being the backbone of economy, the NPA and big ticket frauds cantered in banks have brought tsunami in the entire financial world of country posing more dangerous than standing army at the borders. However this article is oriented towards the NPA and its resolution.

The banking industry has been in turmoil for last few years due to steep rise in nonperforming assets. The rising NPA has dragged the banking industry particularly public sector banks into heavy losses quarter after quarter questioning the very ability and competence of bankers to take judicious decisions. Loan accounts becoming NPA is not a new phenomena for the banking industry however the pace at which the number of NPA accounts are increasing and the volume involved is unprecedented requiring the bankers to introspect and take up damage control measure immediately to arrest the NPA. As per latest data available total bad loans rise to Rs.7.64 Lakh Crore as on Sept 2017 out of which Rs.6.31 Lakh Crore belongs to public sector banks alone. Around 11% of these bad loans pertain to small borrowers which constitute a significant chunk. Accordingly it is crucial to realise the importance of recovery in these small hardcore NPA accounts which under the ambit of big accounts are ensconced in some corner not getting desired attention relentlessly. The above mentioned state of affairs draw the attention of everybody, right from the policy makers to the executors and the course of action required is to enforce recovery measures. The worrisome aspect is the growth in the small NPA accounts. Every account which turns NPA and not getting enough attention by way of recovery efforts is infact instrumental in creating a few more accounts turning NPA by way of showing rewards of not paying while no immediate gratification of making prompt repayment in credit facilities. Thus it kick start a chain reaction of NPA accounts resulting in dilution in the culture of maintaining financial discipline and timely repayment., which is a dangerous situation for the banks as well for financial stability of the country. This calls for innovative solutions to resolve the issue and social media tools should be envisaged as essential part of NPA resolution mechanism.

In changing times, majority of banks workforce now belongs to Gen X and Y employees; likewise, the borrower has also transformed from a ordinary citizen into a digitally automated one where the transactional behaviour is also not confine within the walls of a brick and mortar branch while acquired the shape of personal computer and smartphones enabling him to carry out the most of the banking transactions without the intervention of the manpower of branches. This emerging non intrusive digital banking has granted specific privacy which has a flip side of doing cyber frauds and to dodge away from responsibilities of payment of loan overdue. It would be pertinent to excerpt here former RBI governor’s famous quote-

“In future, banking will be there but banks will not be “

The technology is proving to be the essential and defining feature of banking which warrants the skill set of the bank must be honed to leverage the technology and effectively use the social media platform to track the activities of the borrower so as to constant check in further slippage.

Why Social Media?

Technological advances have changed the world thoroughly. Hardly there is anything which has not been touched and changed by technology. More than anything else it is the technological advancements in communication which affected everyone’s life. The internet and social media have opened the door to connecting people in ways never imagined possible before. Now a days people prefer their introduction and interaction to be conducted and represented more and more on social media. Social media has made it possible for the people to connect any number of people out there at the flash of light.

Having said that, there are various instances when bankers requires to find out unknown facts about borrower and sometimes the borrowers themselves-

Owing to various compulsions of employment, constantly searching and taking up better employment opportunities, short duration job assignments- people migrate swiftly from one place to another without bothering to intimate the bank about their new whereabouts resultantly making it difficult for the bankers to contact them for repayment in their loan accounts.
The responsiveness and co-operation of borrower before the sanction of loan just transformed into nonchalance and stubbornness after the disbursement of loan is now a universal banking truth. Infact the real character and intent of a borrower is revealed only after funds are transferred from banks account to that of borrower’s pocket. Borrower is at liberty to change the residence as its own convenience and so as the mobile number which makes it difficult for the banker to find the current whereabouts through traditional methods. The borrower feels himself away from the reach of bankers and therefore rescued from the repayment obligation. The social media status updates or latest post may be helpful in tracing the current whereabouts of borrower. In fact, the banker must be associated with the customer on facebook, linkedin etc at the time of giving loans and should be documented.
Sometimes details used to specify addresses are vague and itself does not provide any clue how to reach the borrower’s place of residence and/or business location. The officers who does the pre inspection and sanction may be understanding how to reach the address recorded in documents but once the new officials replace the existing ones, they find it difficult to trace the borrower on the basis of recorded address. Here also his social media profile and activities could generate the lead about his present location.
The education loan is the biggest loan portfolio where the nature of activity itself resulting into borrower shifted to other places and having entirely new whereabouts. Policy maker emphasis on education being the fundamental right and that no desirous student should be deprived of higher education or vocational education because of financial reasons, thereby included it in the priority sector targets. The education loan scheme provides for no collateral requirement upto Rs.7.50 Lakh. Private Banks remained passive on this front and mostly public sector banks bothered to provide loan to young students without realizing the malpractices adopted by many of them. Thus 95% of the education loans are sanctioned by PSBs. These loans now have started bleeding the banking sector particularly PSBs with the default in repayment rising to 7.67% of the outstanding as on Mar17 from 5.7% two years ago.

Many times, borrower after completing the study takes up job somewhere but conveniently forgets about repayment of loan. However these borrowers being highly social media frenzy often leave traces of their whereabouts which can be effectively used by lenders.

In many cases of education loan, the students get the negative reinforcement from the family regarding the repayment of loans. It has been observed frequently that the family members come out with an excuse of not having any relationship with the borrower thereby disown their liability and hide the borrower’s whereabouts. However there are many cases when their social media account is showing their joint photograph of just a few weeks/month before. This may create the pressure on family members to reveal the current location and contact number of borrower.

Sometimes borrower does not reveal the assets they posses in asset liability statement or in court/DRT proceedings when banker is required to furnish the complete list of assets to get attachment order against these assets. Social media posts may provide the necessary clue in this regard.
Many time borrowers take the excuse of non repayment of loans owing to ongoing financial crunch while his social media trail is showing him enjoying family vacation at an exotic location or hosting a house warming ceremony for a newly purchased house. Once it is been placed before, borrower has to bite his words and forced to repay.
In many situations, asset tracing has revealed that promoters used proceeds of loans to buy real estate and land in the name of minors and other who do not have an obligation to report or file tax returns. In some cases children’s of such promoters shares pictures of exotic locations or properties through their public profile on social media and gives away details that became the cue to trace the use of loan amount to fund these properties, vacations or vehicles.
Banks have to finance in government sponsored schemes like PMMY, PMEGP etc in order to achieve priority sector targets and to shoulder the responsibility of uplifting of certain sections of society. Here social media can be useful tool to verify the details provided by borrower regarding marital status, family makeup, income criteria, address etc. Bankers requires to have a continues and regular touch/liaison with the borrower. Thus updation of information on social media is quintessential to bridge the gap which tends to widen up due to lack of proximity with the borrower.

Thus social media is new age weapon in the hands of lenders to do due diligence of prospective borrower, to keep a track of borrowers current whereabouts and to verify the factual position of different aspects of borrowers. How it can possible? This all has been possible through Skip Tracing

What is Skip Tracing?

The wilful defaulters who have availed credit facilities from Banks/FI/NBFC fled the scene by shifting to other cities/towns without leaving any trace of new employment or new place of residence thereby defunct the recovery of loans. Skip tracing is a method of locating a person who has disappeared without any trace. Thus the technique of finding untraceable borrowers is formally called Skiptracing.

With the advent of the Internet, skip tracing is much easier than it used to be. There is a huge amount of information available via online resources. Skiptracer, the person using the techniques of skiptracing, may use any number of resources and database to collect the requisite information pertaining to the borrower or subject. Skiptracing has proved to be a very valuable technique in solving cases previously thought unsolvable. Even the seasoned defaulting borrowers who used to camouflage themselves from the lenders now find it difficult rather next to impossible to remove their digital footprints, thus zero possibility to escape from lenders clutches.

How Skiptracing Works

Skip tracing uses the information provided with the application for credit. The information used are the borrower’s name, address, telephone number, place of employment, and any references that were provided with the application for credit. With that information, it is possible to search for new addresses, new telephone numbers, and new places of employment. Furthermore, the names, addresses, and telephone numbers of family members, friends, acquaintances, and possible neighbours, are also useful to verify the correct contact information of the borrower. Inherent to achieving success with skip tracing is the ability to make connections in existing data, most of which is publically available and free to use. There is so much information that is valuable when skip tracing. Aadhar, Driving licence, PAN, Passport, Business licenses, Registrations, Permits, Certifications, Property records, Genealogy records, are just a few of the many available resources one can use to track down a person who has skipped town, which is interestingly the origin of the term used in collections today.

With the advent of the Internet, skip tracing is much easier than it used to be. There is a huge amount of information available via online resources. Phone directories are now available online and the most commonly used tools for skip tracing are phone directories wherein it is also possible to access reverse directory information via directory assistance. This is the practice of obtaining a name and address associated with a telephone number. The mobile number of the customer/borrower/subject picked up from loan application is fed in the Truecaller application or online classified like Justdial, Indiamart, Yellow Pages online or the number is directly fed in Google contextual search engine. The process usually yields three category of information- the name of customer, the email id and/or facebook link to his facebook profile. Finding facebook ID in the first step is rare, however with the help of name, mobile number and mail ID which when fed into Facebook or Linkedin websites may yield the subject’s social media presence. If it is Linkedin profile then we are able to find the professional details of the subject like his official name, organisations he has worked for, current employer etc. These details further can be used to trace the location of the subject and contact him. If the details yield facebook profile then a significant amount of information can be extracted from the profile. The facebook profile may reveal the current job, current location etc of the subject while the images/snaps will trace the whereabouts and the places frequently visited by the subject. The lifestyle or the financial position of the subject can also be gauged through the photographs posted thereon. Friend list of the defaulter can also reveal mutual connections which can be employed to gently push the defaulter into repaying the dues. The likes on the pictures can also help in finding the mutual connections. Sometimes the defaulter prefers to operate under hidden profile, in that case the comments on the cover picture or profile picture can reveal a lot of information. Publicly shared posts of the defaulter also fetch a lot of likes/comments from his near and dear ones, which can be easily identified and the same skiptracing technique can be employed to them, to make contact with the defaulting borrower. Sometimes defaulter used their social media profile to advertise their business which can be an easy scenario to locate the borrower.

CIBIL’s Locate Plus

To trace such defaulters, the Credit Information Bureau (India) Limited (CIBIL), which has been assisting all lenders by sharing the credit information of borrowers of all member organisations (banks and other lending institutions), has come out with a product called ‘Locate Plus’. CIBIL claims that ‘Locate Plus’ will help member-banks and other lending institutions to enrich their customer contact information and enhance efficiency of the collection process. ‘Locate Plus’ will provide the latest information such as customer’s contact addresses (both residential and workplace), and contact numbers available in the CIBIL database. Look at one real case-

Yogesh had migrated to Bangalore from Madhya Pradesh in 2002 and used to work for a leading software company. When he got a lucrative job in the U.S., he coolly withdrew the maximum from his credit cards and took a personal loan of Rs. 2 lakh and fled the scene without informing the lenders about his new domicile or employment.

He never paid back the loans and banks which had funded him could not trace him, till recently. After 5-6 years in the U.S., he returned to India and found a job in Gurgaon. He applied for a credit facility in a bank in Gurgaon in 2009 but his application was rejected as the credit report issued by CIBIL showed that he had defaulted in three banks. The bank where Yogesh’s loan application was rejected promptly gave the personal details of Yogesh to CIBIL. The new contact details of Yogesh were promptly passed on to the three banks of Bangalore, which had funded him in 2002-03, when they approached CIBIL under ‘Locate Plus’ scheme.

All three banks zeroed-in on him and recovered their long-pending bad debts along with interest, late payment fine and recovery charges.

Now, banks and other lending institutions can obtain contact details of such defaulters for a fee from CIBIL. It is a welcome move by CIBIL, as not only defaulters will be kept away from the financial system, but such defaulters will not be able to hide anywhere.

Conclusion

One of the major worries for the banks and other lending institutions has been the large scale increase in defaults of unsecured loans/personal loans/MSME loans/Education loans wherein the whereabouts of borrower is untraced. Lenders are increasingly using social media websites to track defaulters through skiptracing. The urge of people to use social media to share their happy moments with everybody out there in the world and to connect with all the people on their “friend” list at one go has become an important weapon in the hands of lenders to affect their recovery of dues. Facebook updates, tweets, Linkedin profile, emails and various other activities on social media leave an electronic trail that may be easy to follow. However social media like facebook etc are still considered private and borrowers may feel their privacy is being compromised. Although the information which is available/shared publicly by the borrower cannot be considered private yet since the lines between what is public and what is private is having a hairline difference, there is a possibility of false allegation by the borrower regarding this. Therefore it is imperative on the part of policy makers to put a policy framework and issue necessary guidelines for using skiptracing. Till that time, social media should only be used for locating the whereabouts of the borrower and no attempt should be made by bankers either officially or by impersonation on the social media. All communication should be done on banks prescribed official channel only.