REZO.ai launches AI-driven solution to lower NPAs of FinTechs amidst new RBI regulations

In the wake of the RBI’s tightening regulations on Default Loss Guarantee in Digital Lending, Rezo.ai has released its AI-powered ‘Collection Product’ for LSPs (lending service providers) to assist them improve their books by recovering loans more quickly. Rezo’s Collection Product’s sophisticated AI algorithms can analyse massive volumes of data and uncover patterns and trends that human agents frequently overlook. This automation has the potential to reach 90 per cent of borrowers while contributing up to 85 per cent of total loan collection, effectively contributing to a significant reduction in financial institution NPAs. This increases LSPs’ revenues while decreasing their operational costs.

The RBI released guidelines in June this year regarding lending arrangements between digital lenders, including BNPLs, and NBFCs, with a focus on first-loss default guarantees (FLDGs) provided by digital lenders, LSPs, to mitigate possible non-performing assets (NPAs). Prior to these restrictions, online lenders frequently gave guarantees ranging from 20 per cent to 100 per cent to their lending partners, including banks and NBFCs, to protect against loan default losses. The RBI now requires digital lenders to give defaulted guarantees to regulated firms that do not exceed 5% of the overall loan portfolio size.

Because the RBI has limited the FLDG to 5 per cent of the loan portfolio, lenders are now responsible for 95 per cent of potential losses in the event of a default. As a result, NBFCs and FinTechs in the digital lending industry are facing significant operational changes, including changes to their business models and growing costs. Given the foregoing, NBFCs and LSPs must utilise proactive measures to get loans and enhance their books, allowing them to continue collaborating.

Dr Rashi Gupta, Chief Growth Officer, Rezo.ai, said, “We are pleased to make our AI-powered Loan Collection Product available for LSPs and NBFCs. Our advanced AI-driven tailored customer conversations and predictive analysis not only ensures compliance with new regulations but also enhances collection efficiency, ultimately enabling our partners to adapt, thrive and continue delivering value to borrowers, lenders and lending service providers.”

The ‘Collection Product’ examines each borrower’s profile and payment delay causes in order to categorise them based on comparable features, conduct, or needs in order to reduce the risk of future missed payments. It can anticipate debtors’ delinquency patterns by examining the reasons for missed payments. The collection product prioritises efforts and allocates resources more efficiently by segmenting consumers based on delinquency status. Customers that are only a few days late on their payments, for example, require a different approach than those who are several months late. This AI-powered automated and personalised method can assist LSPs and NBFCs in identifying the most successful collection strategies and focusing their efforts on debts that are more likely to be paid.