The Inhouse Collections team has more thorough knowledge of the client and the market. They are careful to maintain a relationship with the client, leading to possible client reactivation. The MFI retains control over the client interface, thus having more direct control and the collections practices remain in line with the institutions’ ethical standards
On the other hand, Inhouse collections model require specific staff and specialized training that only a few MFI’s have time or resources to extend. The control, monitoring and supervision of collection activities also imposes high costs. Investing time and efforts there might prove an hinderance to their core activities.
Considering the spread and reach of MFI’s, agencies may not be available in all areas and markets. As far as MFI collections is concerned, Collection agencies lack experience with the low-income sector. Considering that the MFI business is a relationship-based association, the customer may fail to acknowledge the agency staff which may lead to low success rate.
Having said that, Collection agencies in india come with their own expertise. Collection agencies offer trained and specialized staff that can dedicate ample time to the collection activities. Costly control and supervision of collection activities are transferred to the collection agency. The most important point being that the agency is more equipped to work through a variety of collection approaches like call center operations, pick up facility, field collection agents, legal support etc.
The way forward for MF Industry is to create, construct and carry out a Hybrid JLG model encompassing all the fine points of traditional JLG model combined with current trends in the finance industry as well as the changing technology and digital economy.