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Banks soften conditions of debts to avoid dropping customers in arrears
Monday, October 27, 2014
Banks now call debtors at risk to renege on their payments to renegotiate contracts for credits. In addition, they advance to offer refinancing of loans to those who have already fallen in arrears.
Marco Alva Pino[email protected]
In an environment of lower economic growth which increases the risk of over-indebtedness, banking shows and more willing to reschedule and refinance loans for customers who have problems with the payment of its obligations.
Thus, to avoid falling in arrears banks are taking the initiative to communicate with these people to offer them renegotiate the conditions (deadlines, amounts, etc.) of their loans so that they can continue with the payment of these debts. This alternative is known as reprogramming.
One of the tools that is being used to identify customers at risk of debt distress is a score developed by plants of risk such as Equifax.
"This score permits banks anticipate and call people who have higher risk of overhang to renegotiate their loans. And that is something they are already doing,"said Amilcar Ramos, general manager of Equifax for Peru and Ecuador.
Such score takes into account not only the debt with the financial system but also with other sectors.
"Thus, can recognize a person who while it is up to date in their payments with banks, has arrears, for example, with Telefónica, Luz de el Sur or trading houses. That is an indicator that will soon have non-performing loans at the Bank,"said Ramos.
Ideally, persons who believe that they will have problems with meeting their debts bring advance financial institutions to find a solution, said Javier Jara, the GNB Bank risk manager.
He referred to the banks themselves to develop internal score models that assess the payment behaviour of customers throughout the financial system. "If they fail to pay the (Bank) from the side, your score is impaired as it is estimated that they would soon lose the ability to pay to another entity", added Jara.
He said that customers with these problems usually begin to renege on current loans such as credit cards, and try to of save mortgage debt.
Face potential delays that may be incurred debtors, the managements of banks collection now make preventive calls or send e-mails or text messages, said Jara.
Additionally, the regulations of the Superintendency of banking, insurance and AFP (SBS) requires financial institutions to track very close to its customers in the segment retail to define when they are a normal rating or potentially over-indebted.
When the debtor is late in payments is offered refinancing. "What we are doing is advancing the stages of negotiating to refinance," revealed the Manager of GNB.
This approach usually does not occur in the first segment of the collection. Initially called the customer or an email is sent to invite him to pay, but after 60 days the management becomes even more direct, can visit you.
"Banks are trying to advance the efforts of collection, even we have pilots to provide a solution from the 30th (in arrears);" before we start 60 days", said Jara.
He stressed that customers are more willing to accept such aid mainly in the credit cards with revolving lines, as banks offer them pay in installments and ordered.
If people pay promptly for six consecutive months will recover the credit rating they had before entering the process of refinancing, he said.
Before the downturn, financial institutions are strengthening their areas of collection work and doing lot of follow-up to risky customers, he stressed Jara.
Both interviewees agreed that the banks are more cautious and careful in their lending. But, while Ramos believes that bank credit conditions will become more harsh and restrictive next year, Jara estimated that good months for payments, thanks to the dedication of the CTS and bonuses come.