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GPS to cut down bad debts

Srei BNP Paribas, a joint venture between Srei Infrastructure Finance and BNP Paribas, has introduced a novel system to monitor the activities of its loan customers. It has started the practice of installing GPS on large equipment financed by it so that the daily activities of the borrowers can be tracked. The company believes that keeping a close eye on the borrowers’ activities will help it prevent bad loans. The company has enabled GPS tracking on equipment worth Rs.200 crore and the company plans to extend this to equipment worth Rs 7000 crore within a year, according to chief executive officer D.K. Vyas. Loan-to-value ratio in the equipment financing industry stands between 80% and 85%, which means loans worth Rs 5600 crore will be tracked using this system. The GPS device, which can be fixed anywhere on the equipment without meddling with its internal working, helps the lender track whether the equipment is being used regularly or not. Vyas says that this is part of the company’s plan to mitigate risk using technology. Srei BNP Paribas’ NPAs for the year ended 31 March stood at 3.83% of net advances, lower than 4.07% reported in the year-ago period. The equipment financing market is said to be around Rs 15,000-20,000 crore, where Srei BNP Paribas has 30% market share.

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