“Recently, MeitY has issued a notification which allows home loans to be brought under the digital documentation category. We are still working on that, but that is now a distinct possibility. With vendor and supplier agreements being brought in, the possibilities are endless. I can visualize a situation when any contract can be available in demat form,” said National E-governance Services (NESLMD & CEO Debajyoti Ray Chaudhuri,
He was speaking at the Indian Banks Association’s banking technology conference in Mumbai on Saturday. NESL provides a digital documentation execution service for banks that enables contracts to be made electronically.
Bank CEOs now expect digital or straight-through lending to dramatically increase their share in bank credit. SBI chairman Dinesh Khara said that the lender has built a loan portfolio of Rs 65,000 crore by enabling customers to borrow with a few clicks on the bank’s mobile app YONO, “We expect the portfolio to cross Rs 1 lakh crore this year. Besides this, in-principal approval for car loan, gold loan and home loan is being provided online,” he said.
In addition to digital documentation, what has made online lending possible for banks is the availability of data—both structured and unstructured—and credit scores. Banks are also using technology that will take into account unstructured data, including from social media, that will help them build up credit profiles. According to Khara, SBI has had ‘phenomenal’ data since 2005, which could be used for risk management and analytics for various purposes.
According to Bank of Baroda MD & CEO Sanjeev ChadhaIn the last three years, the bank has managed to grow its business by 34-40%, while its branch network has shrunk by 15% and employee headcount was steady. “The usual link between a growing business and growing physical footprint has been broken forever,” mentioned Chadha.
IDFC First Bank MD & CEO V Vaidyanathan mentioned virtual banking helps to deal with one of the most paradoxes in banking the place those that take smaller loans pay upper costs as a result of the price of operations. Vaidyanathan mentioned that with digitization, fudging of identification paperwork and financial institution statements has come down. “Earlier, banks monitored the loan portfolio every month, whereas now they can do it on a real-time basis. Collections have become easier as customers now get a UPI link. At every stage, the ecosystem is changing dramatically,” mentioned Vaidyanathan.