India has its own database of Politically Exposed Persons

Indian Banks have lent more than Rs. 48 Lac crores to the companies directly associated with Politicians or their relatives.

Using election affidavit data since 2013, Regtechtimes has created a database of business interests of India’s all the major politicians and their relatives.

The database has revealed that there are 5,625 companies where the 1,000 politicians have interests and 9,900 companies where their relatives have interests, which may not always be in the form of shares. The number of companies where both politicians and their relatives have such interests stood at 10,147.

According to the reports in Hindustan Times, Using algorithms and specialised software, the firm Riskpro Management Consulting, has calculated that the total loan outstanding with banks that these 10,147 companies have, and it amounts to a staggering ₹48 lakh crore.

These loans pose a big risk before the banks in India. The loans to politically exposed persons are not considered to be bad always. Reserve Bank of India (RBI) guidelines require banks to take greater precaution if the borrower has political influence. “In such situations, the senior management of the banks has to be involved in the decision-making.

Regtechtimes analysis reveals that some of the biggest nonperforming assets of Indian banking sector are associated with the politicians. In India, the definition of Politically Exposed Person is quite broad. Indiaforensic, which is pioneer of forensic accounting in India, defined the politically exposed persons in its Business Politico Study.politically exposed

Apart from details mentioned in the election affidavits of politicians, the specialised software based on algorithms and predictive analytics developed in-house, utilises parameters such as names of firms, email ids, common addresses, and other such identifiers information.

When the politicians have to exercise their political clout or power, they get associated with certain companies for a short period of time and once the benefit is passed on to the company or when the event is completed then they prefer to resign. Biznexxus reports consider these associations in the Enhanced Due Diligence Reports.

This information would help the banks to understand the risks associated with the borrowers where the politicians are involved. This type of ‘Market Intelligence’ is unstructured information about borrowers from different sources. Every time information about the politicians is not available from the structured sources, information is scattered and getting the information from the public domain sources and connecting the dots is the work of the regtech companies like Riskpro.