3rd Month Project Report

ON

3 - COLLECTION
(SILIGURI BRANCH)

SUBMITED BY:ANIMESH MUKHERJEE (MANAGEMENT TRAINEE)

CONTENTS

INTRODUCTION CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6 CHAPTER 7 CHAPTER 8 DELINQUENCY LEVEL PDC COLLECTION STATUS FIELD COLLECTION STATUS DETAILS OF 3 CASES OF COLLECTION FROM 0-4 BUCKET WITH PROCESS AND RESULT DUE DATE ANALYSIS CHEQUE BOUNCING STATUS DEBTORS LPR REPORT COMMITMENT Vs ACTUAL COLLECTION STATUS

INTRODUCTION
Collection is one of the most important parts in automobile industry, infact it wont be a mistake to say that the backbone of doing business freely is the strong collection system. We all know that by doing business the profitability of the company will increase but the main profit will only come when the money given to the customers returns back to us, then only the profit will be generated. Any company having a strong collection set up will undoubtedly prosper at the highest level. The secret of taking the company to the next level is to have sound business knowledge and have a proper back up in the mode of good collection system. From the point of our branch collection becomes more important as most of the contracts are collected through field, PDC & ECS contracts are very few, as for PDC it is important to have a local clearance otherwise outstation cheques takes a lot of days to clear, as a result the payment hampers, whereas for ECS one needs to have a tie up with bank for this clearance. Most of the business contracts of our branch is outside the city area, it is based on rural areas which is quite far from our branch, so either the customers have to come to our office to pay the instalment or we have to collect it from them. When customers needs a loan they will come to us, but as the loan is taken it seems that their responsibility gets over, though it is not same for all the customers but honestly most of customers feel so. Here our collection team comes into the picture; their presence in the field ensures that the money comes back to us in the form of profit. Until we create pressure on the customers, customers will always show their problem and will try to defer it. While, at the time of doing the business it is being strictly conveyed to the customers that it is their responsibility to come to the office and pay the instalments, still the customers falters and the collection team ultimately solves it. We can say collection is an art, as it depends on the person to collect it from the customer if the customer intentionally tries to default. The intention of the customer is quite difficult to judge, and most of the times it depends on the person who is in touch with the customer to judge whether he is intentionally not paying the instalment. It is essential for the executive to have a proper follow up with the customer, as through this the customer the customer will be under pressure and will be forced to pay the payment, if the customer tries to intentionally default. Through this project we will understand the collection situation of our branch through different areas, like what is delinquency, what is its level in the branch, the PDC status of our branch, the CRA status i.e. the cheque bouncing status, what has been the collection efficiency through the months, the NPA status & others which will give a picture of the collection status of our branch through the months.

DELINQUENCY LEVEL: When one first sets up ones loan, he/she agrees to certain terms and conditions with the lenders. One of these terms is the date on which your payment would be received every month. If one fails to make the payment to the lender by the specified date then the loan will become delinquent. Lenders will charge a fee to your account for a payment being late, and you will risk your interest rate. So in other words we can say delinquency is a situation that occurs when loan payments are due, it is delinquent even when one loan payment is one day late. It is important form the customers point of view not to go delinquent, while making their payment, as first of all it shows in the credit report of the customers and by this the customers track record gets affected hence it will be difficult for the customer to take loan next time, and secondly the customer gets into the bad books of the company. While all the customers do not get delinquent intentionally, they do get delinquent for some really tough situations, some of the cause is discussed below.

Causes: Accident of vehicle or breakdown of engine or other parts is many times the major reasons for which customers falter in payments. Due to some medical problems of the family, and the vehicle owner being the sole earner of the house could not manage the payment as money goes out in medical payments. For vehicles such as tractors, small load carrying vehicles like pick up vans, maximum in the rural areas, depend entirely on the market and agricultural season, and they lose their earnings in the offseason and it suddenly overburdens the customers paying capacity. Some of the customers sells the asset to a third party in a different region and enjoy the fraud they committed, and it gets tougher for the company to bring the payment. Sudden death of the agreement holder makes the contract delinquent. We sometimes dont educate the customer in fear of losing the business, but in the other hand ignorant customers gets prone to become delinquent. Misbehaviour of collection executives, Miscommunication by the business executives regarding interest, instalment payment procedure and other things with the customers makes it delinquent. Lack of proper follow up by the executives, and irregular tracking of the assets movement makes the contract delinquent. Not understanding the actual reason of the customers of late payment and putting too much pressure on the customers backfires, and the customers become rigid in not paying the payment.

DELINQUENCY IN BRANCH The below given data in the table is based on the last financial year i.e. 2010-11. It gives the information of how has been the collection month wise in the last financial year.

Months

No of Live Contrcts

Actual CD (In lkhs)

CD Collctn (In Lkhs)

No of OD Case

Actual OD (In lkhs)

OD Collctn (In Lkhs)

OD Days (OD/CD * 30)

Collection Efficiency

April May June July Aug Sept Oct Nov Dec Jan Feb Mar

1841 1948 2020 2079 2155 2225 2327 2429 2561 2628 2750 2869

139.05 143.17 149.1 157.54 162.53 170.51 179.02 186.53 195.64 204.54 212.99 222.12

115.98 129.42 135.16 146.09 149.06 157.41 162.92 169.92 178.66 186.25 194.12 209.5

581 605 556 565 495 494 527 515 525 571 534 581

160.98 170.3 166.77 163.2 158.16 162.36 156.74 150.29 151.43 160.18 160.2 166.98

7.53 13.51 15.58 13.21 12.41 13.31 11.91 13.87 12.83 11.42 10.21 24.49

35 36 34 31 29 29 26 24 23 23 23 23

89 100 101 101 99 100 98 99 98 97 16 105

NPA (NON PERFORMING ASSETS) CASES: NPA refers to the non performing assets of the company, i.e. those customers who have reached a certain ageing normally 7 and above are said to NPA to the company. These are those customers who we think are not willing to give money and the company starts to take a part of the amount due as loss to the company. The below given tables gives the NPA of our branch month wise in the last financial year and also product wise to the company. Month Wise MONTHS APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH LIVE CASES
1841 1948 2020 2079 2155 2225 2327 2429 2561 2628 2750 2869

NPA CASES

90 91 86 86 90 76 75 74 83 78 80 60

% OF NPA CASES 4.88% 4.67% 4.25% 4.13% 4.17% 3.41% 3.22% 3.04% 3.24% 2.96% 2.90% 2.09%

Sector Wise (As on Sept 19 we have altogether 5343 contracts, and out of those the details according to their ageing period are given below ) SECTOR AUTO CV M&M CV OTHERS TRACTORS OTHERS 1 5 AGE 2349 23 252 302 2256
0 1 AGE

FNPA ( 6 AGE) 6 0 2 2 10
FNPA ( 2 AGE)

NPA ( 7 & ABOVE) 40 2 3 2 19

NPA ( 3 & ABOVE)

PERSONAL LOAN TW M&M TW OTHERS

19 10 42

1 0 0

2 0 1

Fig 1

NPA %
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 4.88% 4.67% 4.25% 4.13% 3.41% 3.04% 2.96% 2.09%

4.17% 3.22% 3.24% 2.90% NPA %

The above line graph shows the percentage of NPA cases over the months in the last financial year, which started with 4.88% and ended in 2.09 % where there was a constant improvement with respect to it. Fig 2

NPA CASES
0 2 1 Auto CV M&M 19 40 2 CV Others Tractors Others Personal Loan 3 2 TW M&M TW Others

The Pie chart shows the no of NPA cases sector wise of our branch till Sept 19 2011.

PDC COLLECTION STATUS OF OUR BRANCH: PDC (Post dated Cheques) collection refers to the payment made by the customers through cheque format, so the details of the no PDC cases month wise in the last financial year is given in the below given table. If the customers provide local cheques, then it takes a day to clear the amount, whereas if it is an oustation cheque it will take a lot of get the cheque cleared.

MONTHS APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH

NO OF LIVE CASES 1841 1948 2020 2079 2155 2225 2327 2429 2561 2628 2750 2869

PDC CASES 296 308 314 353 362 372 375 370 385 411 442 462

3500 2869 2561 2628 2750

3000 2429

2500 1948 2020 2079 2155

2225

2327

2000 1841

1500

LIVE CASES PDC CASES

1000 296 308 314 353 362 372 375 370 385 411 442 462

500

The above is the representation of the pdc cases in our branch in the last financial year. The number of PDC cases in our branch is not high, most of the customers of ours either prefer cash collection or they would like to deposit it in the office. City contracts are few in number and the majority of the business is of non-city contracts, so maximum customers do not have local bank accounts, and for instalment payment purpose we cant take outstation bank account cheques as it would take a lot of time to get the payment cleared as a result either the customers pay through field cash collection or by depositing it in the office as a result of this the number of pdc cases in the branch is less.

DUE DATE ANALYSIS:

As on Sept 19 th total number of cases in our branch is 5342 cases, it includes live cases, tenure completed cases, cancelled cases, repo cases, cases which are pre-closed and whose dues have been received and cases which are critical. The below table will show the details of due dates of all these cases.

DUE DATE
1 to 4 5 th 6 to 9 10 th 11 to 14 15 th 16 to 19 20 th 21 to 24 25 th 26 to 29 30 31

NO OF CASES
590 342 249 473 307 439 344 512 384 1282 289 131

% OF CASES
9.06 % 6.41 % 4.65 % 8.86 % 5.75 % 8.22 % 6.43 % 9.59 % 7.18 % 23.99 % 5.41 % 2.47 %

DUE DATE %
5.41% 2.47% 9.06% 1 to 4 6.41% 4.65% 23.99% 8.86% 5.75% 7.18% 9.59% 6.43% 8.22% 5 th 6 to 9 10 th 11 to 14 15 th 16 to 19 20 th 21 to 24 25 th 26 to 29 30 - 31

The pie chart is the graphical representation of the due date % table which is given above the pie chart.

To give a more clear picture of the due date for the payment of the customers, I have taken the last year data through which the due date of the last financial year i.e 10 11 is given . Last year we had done 1474 numbers of business and the due dates of those business are as follows 2010 2011 DUE DATE
1 to 4 5 th 6 to 9 10 th 11 to 14 15 th 16 to 19 20 th 21 to 24 25 th 26 to 29 30 31

NO OF CASES
45 100 33 191 44 149 50 200 89 564 3 7

% OF CASES
3.05 % 6.78 % 2.24 % 12.96 % 2.99 % 10.11 % 3.39 % 13.56 % 6.03 % 38.26 % .21 % .42 %

DUE DATE % ( 10 -11)

1 to 4 0.21% 0.42% 3.05% 2.24% 6.78% 5 th 6 to 9 10 th 11 to 14 38.26% 12.96% 15 th 16 to 19 2.99% 10.11% 13.56% 6.03% 0 20 th 21 to 24 25 th 26 to 29 30 - 31

DETAILS OF 3 CASES OF COLLECTION FROM 0-4 BUCKET WITH PROCESS AND RESULT: Case 1: Details: Customer Name Contract No. Contract Date Asset Details Engine No Dealer Name Tenure Asset Cost Finance Amount Finance Charges Agreement Value EMI Amount Instalment Frequency Payment Mode Ageing Mahesh Saha 919770 02/10/2009 Mahindra Bolero Plus GA94A16610 Khokhan Motors 48 Months 535559 428000 172570 600570 12760 Monthly Cash Collection 3

Case 2: Details: -

Customer Name Contract No. Contract Date Asset Details Engine No Dealer Name Tenure Asset Cost Finance Amount Finance Charges Agreement Value EMI Amount Instalment Frequency Payment Mode Ageing

Case 3: Details: -

Customer Name Contract No. Contract Date Asset Details Engine No Dealer Name Tenure Asset Cost Finance Amount Finance Charges Agreement Value EMI Amount Instalment Frequency Payment Mode Ageing

PERCENTAGE OF CHEQUE BOUNCING IN MONTH:The percentage of PDC cases in our branch is very less when compared to our field cash collection, as the major source of our business is generated through the rural areas, hence maximum customers either do not have a bank account or they dont do banking transactions at regular intervals. The PDC bouncing status is been given in the below table based on the last financial year 2010 11.

MONTHS
APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH

PDC CASES
296 308 314 353 362 372 375 370 385 411 442 462

PDC BOUNCED

BOUNCED %

109 98 140 104 142 144 166 166 138 228

34.7 % 27.7 % 38.6 % 28.0 % 37.8 % 38.9 % 43.1 % 40.3 % 31.22 % 49.35 %

The above table is been represented in graphical formats, there are two graphs which shows the CRA status and the amount of those CRA month wise.

COMMITMENT Vs ACTUAL STATUS

The commitment vs the actual status of our branch of both the CD & OD with its efficiency is been given in the below table. The status is given for the period of 6 months starting from January 2011 till June 2011.

MONTH

CD TARGET (IN LKHS)

CD ACTUAL (IN LKHS)

CD EFFICIENCY

OD TARGET (IN LKHS)

OD ACTUAL (IN LKHS)

OD EFFICIENCY

TOTAL EFFICIENCY

JAN

204.54

186.25

91.05 %

160.18

11.42

7.12 %

97 %

FEB

212.99

194.12

91.14 %

160.2

10.21

6.37 %

96 %

MAR

222.12

209.5

94.31 %

166.98

24.49

14.66 %

105 %

APRIL

229.28

203.49

88.75 %

152.26

6.84

4.5 %

92 %

MAY

237.80

219.54

92.32 %

165.50

13.34

8.06 %

98 %

JUNE

245.22

226.15

92.22 %

167.23

126.47

7.56 %

97 %

The above table of commitment vs the actual achieved is also been represented in the form of pictorial presentation in the next page.