There has been an increased demand – as much as 30% – for collection or recovery agents in commercial banks in the last 6 months with banks facing increased levels of stress in retail lending business, especially in unsecured loans, says a study by TeamLease Services, a recruitment and HR services firm. Some of the banks are also compelled to use sales staff in recovery efforts, according to the study.
The study says the total number of outsourced staff in the BFSI sector, as of July 2024, was 77,000, with 6,000 serving as recovery agents. These figures have increased to 82,000 and 8800 by December 2024.
TeamLease says unsecured loans like credit card loans and personal loans offered by banks and NBFCs have apparently gone up in the last 6 months with corresponding increase in delinquency rates. This has forced these institutions to hire more collection agents.
RBI too has pointed out in its ‘Trends and Progress of Banking in India 2023-24’ Report that banks need to have greater vigilance in respect of delinquency and leverage in unsecured loans. The share of unsecured loans in the total credit given by scheduled commercial banks has been increasing since March 2015, reaching 25.5% by March 2023, before falling to 25.3% a year later.
Many banks admit that they have engaged additional staff in their recovery section in the last 6 months as there has been increased demand for personal loans and loans for consumer durables and corresponding signs of increase in delinquency. Some of the banks and even NBFCs have also indicated that there has been a slowdown in the recent past in the retail lending segment because of the increasing delinquencies and these institutions are now focusing more on collection efforts.
According to Krishnendu Chatterjee, Vice President and Business Head at TeamLease Services, unsecured loans have gone up, and the resultant delinquency rates too have increased, due to which demand for collection profiles in the retail lending space, specifically unsecured loans like credit cards and personal loans, has increased in the past 6 months. He also added that some the firm’s clients are now seeking more staff for collection efforts unlike the existing trend of having sales-related staff.
Several private banks have reported increased levels of NPAs in the unsecured loans segments in the Sep-Dec 2024 period. Some of these banks are also admitting that in the last few months, stress in unsecured lending has increased and they are emphasizing on having more efficient collection or recovery mechanism. Collection agents are outsourced and the agencies providing resources are preferring banks where they get better remuneration.
TeamLease said in the last 6-8 months, the demand for collection agents has gone up by 26% compared to the previous year. This is a steep rise, considering collection headcounts have always remained flat or marginally increased in previous years. It added that there is an increase in the overall base and some of the banks are giving additional mandates for recovery agents.
TeamLease has some 85,000 employees in areas like sales, customer care and field operations. It said it has recruited some 7000 new employees, specifically for collection efforts in banks NBFCs, credit card companies and MFIs. Chatterjee said this is a direct result of the challenges seen in the unsecured loan segment and the efforts by banks to counter these challenges.
