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January 10, 2025
The Banking Industry in India has experienced rapid transformation. Previously, Banks were mainly regarded as safe-keepers of money and were conservative about lending. They gave financial aid to government-sponsored schemes and well-known industrialists. Banks gave credit to a select few with onerous paperwork and securities.
Gradually, with socio-economic changes beginning in the last century, the opening up of the public sector, and the privatisation of Banks in the country, there was a rapid change in functioning. Funds were forwarded as loans for business purposes as private enterprise was encouraged.
Development and growth brought about better opportunities for qualified professionals such as doctors and engineers, leading to a strong middle class. Banks initiated offers of credit, both secure and unsecured, to the self-employed and salaried individuals. Personal Loans and Credit Cards are offered to customers in addition to mortgages.
Personal Loans allow individuals to fulfil emergency and lifestyle requirements with funds when needed. To meet customer requirements promptly, banks and NBFCs endeavour to disburse loan amounts quickly and efficiently. The digitalisation of the banking industry has significantly reduced the time taken for Personal Loan Processing. Loans that previously needed a week or more to process are now disbursed in hours and advertised as Online Instant Personal Loans. Due to the automation of many processes, such as credit checks and document verification, which were previously done manually,
Noteworthy areas where digitalisation has helped customers eliminate delays and enabled Lenders to reach the right audience are as follows:
All the information is available online if you want to Apply for a Personal Loan you can check for the Eligibility Criteria for Personal Loan that best suit your profile details. For example, if you have not used any credit before, Apply for a Personal Loan from HDFC Bank, which provides a Personal Loan without CIBIL Score. Check for the Lender that provides the most suitable terms and the Personal loan lowest interest rate.
Personal Loan Application and Documentation: In the past, whenever a customer needed, say, a Personal loan from HDFC Bank, a visit to the Bank branch was required, or the Bank executive came to the office or home premises with the Personal Loan Application Form. Photocopies of all personal loan documents required were to be attached as hard copies physically stamped and signed by the applicant.
Gone are those Days: An applicant can apply online from a computer or mobile phone interface within minutes in the comfort of a home or office premise. The Personal Loan Documents are available online, such as an Aadhaar card and a PAN card as proof of identity and your current address. An applicant can instantly download the banking information, and the salary slips are usually available by mail or retrieved from the company’s portal.
Thus, the online application reduces the paperwork, and Personal Loan Application Requests are completed within minutes and forwarded to the Bank.
Credit Report Check: Credit bureaus record all transactions done by individuals that Banks and NBFCs report the Credit Bureau of India, or Transunion CIBIL, as it is commonly known, is regarded as the primary agency by most lenders. The CIBIL commenced operations in India in 2007. It records all individual transactions and generates a risk score. Lenders refer to individuals’ repayment histories to reduce the chances of default.
With the digitalisation of records, credit transactions get updated instantly, and the Bank receives the credit history online. The processing of a Personal Loan Application is initiated after the Lender is satisfied that the score is above the required benchmark an applicant can also access the CIBIL Score Online to check for discrepancies in the records. If there are delays or aberrations in the payment history, it is better not to apply, as a decline further depletes the score.
Verification: On receipt of a Personal Loan Application, the Lender verifies the authenticity of the information and documents. It is now convenient to check the customer’s KYC Documents Online, such as the Aadhaar card and PAN card, from the Government portal, a far change from when the Bank team physically matched via a visit to the client.
Digitalisation has streamlined verification processes. Lenders can now conveniently verify the authenticity of documents via the video KYC process on a call with the customer. In case of unavailability, there is the option of biometrics KYC. This efficient process instils confidence that the customer’s details are accurate and that the applicant can be located easily in case of a default.
Embracing digitalisation has ushered in a new era, empowering you to manage your finances from the comfort of your home, computer, or phone. You no longer need to visit the Bank and stand in queues; account holders can draw cash from an ATM, and payments are made via NEFT or IMPS, all at your fingertips.
Personal Loans have also undergone a radical change with digitalisation customer Banking can be verified online with authorisation to check customers’ income and outgoings.
Before the Reserve Bank of India introduced the CTS (Cheque Truncation System), a specific number of cheques as per the tenure for repayment were required for the payment of the Personal Loan EMI suppose a customer receives an HDFC Bank Personal Loan for a tenure of 36 months, a similar number of cheques were to be given to the Bank. The Bank then physically sent each cheque for clearing on the due date, which was onerous and time-consuming. Now, a CTS cheque facilitates the online clearing of funds, the amount approved as a personal loan is transferred by the Bank to the applicant account and the EMI is presented for clearing through ECS (electronic clearing system). This system has significantly reduced the time and effort required for loan repayments, making it more convenient for borrowers.
Customer data and information are updated online, expediting the decision, and the applicant is informed of the status via email or telephone.
With digital systems in place, Banks can now securely store customer Data and enable automated Preapproved Personal loan offers to applicants with healthy banking histories. Online systems have made it easy and practical to store data, eliminating the need for scores of physical files and documents. Now, analysing years of data is possible and efficient, allowing banks to track customer data over the years and reconsider personal loan requests if an applicant re-applies.
Now, banks can track customer data over the years, checking for Personal Loan Rejection Reasons for customers denied credit previously and can reconsider the request if an applicant re-applies.
With the infinite possibilities and progress digitalisation has made possible, Lenders must address usage concerns.
In conclusion, the digital sector is constantly progressing and developing, with AI taking over various functions. The financial industry is trying to keep pace, and there is no telling what the future holds.
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