COMMON LOAN PORTAL FOR PUBLIC SECTOR BANKS

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1 COMMON LOAN PORTAL FOR PUBLIC SECTOR BANKS Presented by Aditya Ramamoorthy Nellaiappan R Sreelakshmi Lajith Tanya Vaish

2 INTRODUCTION Public sector banks are reportedly considering a common portal to offer instant personal, housing and other retail loans to their borrowers based on individual credit-worthiness The portal will start off with providing personal loans, housing loans and other retail loans and later will expand to small and micro industry loans The portal will have simplified forms and processes to help borrowers get faster approvals on their application All PSBs will have a common checklist which has to be submitted by the borrowers and all relevant details have to be filled in which is an one time process This idea a follow up on the Pradhan Manthri Jan Dhan Yojna which is focused on making banking more inclusive

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4 Why do we need a common portal? This development comes against the backdrop of private banks stealing the march over the PSBs in terms of the loan books State-owned banks are struggling to expand their loans portfolio despite making up 70 per cent of the Indian banking system According to RBI s website, scheduled commercial banks (SCB) share in MSME credit has fallen from nearly 95 per cent in December 2015 to 90 per cent in March The entire process of availing and getting a loan from a PSB is a very complicated and the people are not really aware of the schemes available Individuals need to visit several banks personally choose and select the right bank for them to avail the loan Sep-16 Mar-17 Mar-18 PSB Private banks

5 Credit growth - Indian Banking System

6 LOAN APPLICATION PROCEDURE

7 LOAN APPLICATION PROCESS PRIVATE & PUBLIC SECTOR BANKS Convenience and Effort Private Bank If you prefer a personalized agent coming to you, then private bank is your choice. They offer you door-to-door services so that you don t have to run from pillar to post to get the loan sanctioned. Public Bank If you don t have trouble waiting in long queues for your turn, then public bank is your option. You should be prepared to do all the legwork. Processing Fee Approval Time Prepayment Restriction Digitization Since you are getting most of the convenience from the bank s end, you will be levied a high processing fee. The approval time of private banks is low. So, if you are in urgent need of a loan, private banks will be more efficient. You will have to wait for a minimum of 6 to 12 months before you can repay the loan, depending on the bank to which you applied. Private banks are going digital to get closer to their customers. With banks mobile apps websites, it gets convenient for the borrower to know the status of their loan application and repayment. The processing fee for the public bank is much lower. Their process is highly stringent and is a major reason for the delay in the loan approval. Loan taken from a public sector banks can be repaid anytime after you have borrowed the loan. Public banks are behind private banks in this regard and they are yet to catch up on the digital media front.

8 SALIENT FEATURES Information about all loan schemes in PSBs Common Loan Application Form Access to multiple banks Facility for Banks to download all relevant documents Facility for Banks to upload loan processing status Easy grievance redressal Dashboard facility to view status of the loan application

9 FOCUS AREAS Customer Responsiveness It encompasses EASE (Easy Access & Service Enhancement) for customer comfort in terms of banking from home, grievance redressal or forms simplification Responsible Banking It focusses on financial stability, improved governance for ensuring outcomes, and EASE for clean and commercially-prudent business PSBs as UdyamiMitra: It ensures that the banks act as a medium of financing and bill discounting for MSMEs

10 FOCUS AREAS (Cont.) Credit Off-take: The focus is on ensuring the EASE for the borrower by improving loan application processes and proactive delivery of credit. This also increases the credit portfolio of the bank. Deepening Financial Inclusion & Digitalisation: Being a follow up to the PMJDY, it ensures wider reach through near-home banking, microinsurance and digitalisation Ensuring outcomes - HR: Developing personnel for Brand PSB

11 Benefits of having a common portal Ease of doing business improves Process simplification Comprehensive interest rates Financial inclusion Easy assessment of credit worthiness

12 Shortcomings Transition time Privacy issues Security concerns Technological gap Loss of jobs