New Delhi: Amritha Renganath’s first task, as instructor of a new course to train people to work with debt collection agencies, is to explain just what it is that a debt collector does.
“What is a collection agent?” Renganath asks a dozen young men and two women, many from Uttar Pradesh and Haryana, who have come to Delhi in search of their first job. Her question is met with silence.
Right time: A company picture of debt collectors training at Avsarr Finance Academy.
“Do you go to an interview without knowing what the job is?” Again, silence.
Then one student ventures a guess. “Collecting of information?” he says.
Another turns to what he hopes will be an all-purpose answer: “Whatever work you tell me, I will do.”
Efforts to get more young Indians into the formal economy are running into the realities of hiring freezes across industries and economic growth that, at a projected 7.1%, is expected to be the slowest in six years. With avenues in retail and sales constricted, training firms such as Renganath’s, a Delhi-based start-up called Avsarr Quest Pvt. Ltd, are looking for new opportunities.
“Students from smaller towns don’t earn much, or didn’t go beyond 10th (class), but collections they can do,” says one of Avsarr’s founders, Bejoy Suri.
Debt collection has been a small and unorganized sector in India, with a reputation for using intimidating, strong-arm tactics to get defaulters to pay up loans. As the industry grew—outstanding credit card loans increased nearly 70% last year to almost Rs30,000 crore, and at least 45% the year before that, according to data from the Reserve Bank of India (RBI)—and borrowers complained to the police about collection methods ranging from repeated phone calls to thugs sent to beat them up, RBI instituted guidelines that required agents to undergo 100 hours of professional training.
Avsarr had tried out several other courses, including retail sales and banking operations, but the timing on each was off. The company first sought to train workers for jobs in retail, but employers didn’t want to pay for training.
Students kept asking for jobs in “operations”, according to another co-founder, Gunjan Aggarwal. So the firm surveyed students and realized they wanted jobs where they could spend their days inside offices. Thus the next course covered banking and insurance operations, training students to be tellers and customer service representatives. The course was a success until September, when most bank branch jobs dried up.
Avsarr received accreditation to run the collection agent programme in August, and launched it just as it ended the banking course. “This was perfect for us, it is the base of the pyramid,” says Aggarwal “We felt this was something we want to scale up.” An entry-level collection agent, she says, can expect to get around Rs5,000 to Rs7,000 per month.
Collections agencies are still relatively well off in the downturn. One outsourcing firm, Effort BPO Ltd, expanded to 240 collections agents from 150 it employed in October, according to Satyajeet Shukla, the company’s human resources manager.
One Avsarr student, Vinay Kumar Singh, 26, who finished B.Sc in mathematics from Varanasi, and is working with a company that does billing and posting for HT Media Ltd, the publisher of Mint, the Hindustan Times and Hindustan, said he came to the course because he wanted to join a bank. Another student, Jaginder Singh, is fresh from finishing his B.Tech in Haryana. He wants to join a call centre.
The current batch of students is placed at three different agencies in Delhi, and the Rs6,500 fee is split in two instalments. Doing back-office work for collecting loan repayments from Americans has also become a booming business in India, with outsourcing firms such as Convergys Corp. and Firstource Solutions expanding those services, as the US economy struggles with recession.
Firstsource, for example, recently hired 250 new agents in India to keep up with growing business and overhauled its training process to deal with complex cases, identify different sources of funds available to defaulters, such as retirement accounts and severance packages, and focus on smaller payments rather than one lump sum.
“It’s just become a lot tougher to collect, (and it means) being creative at the training level, and the operation level,” says Timothy Smith, who heads training for collections at Firstsource.
Avsarr’s training, which is accredited by the Indian Institute of Banking and Finance, also includes units on basic banking and loan products. But much of Avsarr’s debt collection training revolves around much more basic soft skills—how to dress, how to greet people, and even how to comb one’s hair.
In order for Renganath to illustrate the difference between formal and informal clothing, for example, she pulls out one student. He is wearing a gray, button-down shirt with a T-shirt underneath it. Both are tucked into khakis, and held together with a brown belt. An expensive-looking watch sits on his wrist, and sneakers cover his feet.
What do you think of him? she asks the class.
“He is a good boy,” one offers.
Ditch the sneakers to stop looking like a “good, sweet boy”, she advises him. Shoes will transform you into a “formal professional”.