Thrissur, Kerala-based
private bank the South Indian Bank has recently completed a 'Credit Automation Project', which the bank feels will improve its efficiency in credit processing and sanctioning of corporate loans. The bank claims that this is a 'paperless flow' of the loan sanctioning and is a unique process. Managing director and chief executive officer of the bank, V.A. Joseph said at the launch of the project that the bank will be able to expedite scrutiny of the loan application, appraisal and assessment of the limits with the help of 'Loanflo', the corporate loan solution software offered by LaserSoft Infosystems. "This will change the way the bank as a lender has been doing business," he said, adding it will allow automation of the entire loan processing, sanctioning and tracking system for corporate loans.
The system of HDFC has a very efficient CRM functionality.
Says Arivazhagan: "Our customers can log on to the system and trace the status of their loans. The system also generates year-end reports, certificates and statements of loans, which are mailed or couriered to the customers without their asking for it, to facilitate their tax planning."
Arivazhagan says the system is basically a decision-aiding system rather than a decision making system. The data in the system helps a staff member in taking a decision. However, it is capable of assuming a decision-making system as well.
"In a business like ours, the most important aspect is to keep information in the desired structured format and make it available to the users in the right way at the right time. Automation is very relevant for such a requirement," he adds, Srivastava of Union Bank of India says being a centralized, webbased system, it has helped the bank to make loan processing, sanctioning and monitoring fully system driven. Says he: "Each and every loan application will now have to go through the system irrespective of the nature of the loan. And across the bank, the terms and conditions are uniform, the rates of interest are uniform, the sanctioning modalities are uniform, securities sought are the same. It is totally transparent. Secondly, policy enforcement is very effective. Besides, the bank can revise policies and incorporate these into the system, which will then become effective across the bank. Thirdly, it has given a lot of confidence to the branch managers because it is ensured that the loan is sanctioned after fully meeting all the required formalities and fully following the set rules and regulations. Fourthly, the entire monitoring and recovery process is made very easy and efficient with the alerts given by the system for EMI payments, for defaults, etc. Even the managers are spared of the efforts of drafting letters to customers about EMI payments, about defaults, etc, and of sending legal notices as these letters and notices are generated by the system at the appropriate
time. This drastically reduces the turnaround time. Fifthly, we can add any new products at any point of time and in pretty quick time and make it available across the bank. Finally, since the database is centralized, updating is done in real time."
Srivastava says the system is capable of countering delinquency in an effective manner because of the automated monitoring that is possible.
Arivazhagan too contends that the system is capable of proViding analysis of customer performance and feedback. This can help the credit department in assessing fresh applications from existing customers, who will ensure that they do not default. It is just not possible to have these analyses in a physical mode.
WORKFLOW
Any typical loan processing involves decisions at different levels. How is information managed in such a situation?
Srivastava says it is a workflow-based system. A loan proposal based on parameters set in the system can be decided by a branch manager, or it can if necessary go to a regional office or to the central office or to the board of directors. The concerned panel of bank officers can rate the application and record their views in the form of minutes and sign the minutes. This document is scanned and uploaded in the system. The application can be accepted and the loan sanctioned, or it can be rejected. The whole process is facilitated through a mailbox system.
"In case a particular loan is sanctioned in exceptional circumstances - we call it a case of deviation - there are provisions in the system to record the deviations to the parameters and have it approved by the concerned authorities," he adds.
Kalia of Vijaya Bank says information flow is automated in the loan automation system, through workflow mechanisms. "Automation does help in expeditious decision making as physical movement of papers is curtailed to a large extent."
Does an automated system bring in efficiency through centralization and speed to the lending process?
Arivazhagan cites the instance of HDFC: "Over the years, we have recorded an annual growth of 25% to 30%, while the growth in our manpower has been insignificant. Secondly, our assets to expenses ratio is one of the lowest in the world, that is 0.4%. This is proven efficiency and this has been possible through automation."
"A loan automation system is ideally an end-to-end integrated system, starting with lead management. In our case, even documentation is stimulated by the system, starting with collection and verification of documents, their safekeeping and their return to the customers upon completion of the loan tenure. The system generates MIS reports as well as compliance and regulatory reports for the regualtor, in our case, the National Housing Board."
Shanmugam of Mahindra Finance says surely the model
private bank the South Indian Bank has recently completed a 'Credit Automation Project', which the bank feels will improve its efficiency in credit processing and sanctioning of corporate loans. The bank claims that this is a 'paperless flow' of the loan sanctioning and is a unique process. Managing director and chief executive officer of the bank, V.A. Joseph said at the launch of the project that the bank will be able to expedite scrutiny of the loan application, appraisal and assessment of the limits with the help of 'Loanflo', the corporate loan solution software offered by LaserSoft Infosystems. "This will change the way the bank as a lender has been doing business," he said, adding it will allow automation of the entire loan processing, sanctioning and tracking system for corporate loans.
The system of HDFC has a very efficient CRM functionality.
Says Arivazhagan: "Our customers can log on to the system and trace the status of their loans. The system also generates year-end reports, certificates and statements of loans, which are mailed or couriered to the customers without their asking for it, to facilitate their tax planning."
Arivazhagan says the system is basically a decision-aiding system rather than a decision making system. The data in the system helps a staff member in taking a decision. However, it is capable of assuming a decision-making system as well.
"In a business like ours, the most important aspect is to keep information in the desired structured format and make it available to the users in the right way at the right time. Automation is very relevant for such a requirement," he adds, Srivastava of Union Bank of India says being a centralized, webbased system, it has helped the bank to make loan processing, sanctioning and monitoring fully system driven. Says he: "Each and every loan application will now have to go through the system irrespective of the nature of the loan. And across the bank, the terms and conditions are uniform, the rates of interest are uniform, the sanctioning modalities are uniform, securities sought are the same. It is totally transparent. Secondly, policy enforcement is very effective. Besides, the bank can revise policies and incorporate these into the system, which will then become effective across the bank. Thirdly, it has given a lot of confidence to the branch managers because it is ensured that the loan is sanctioned after fully meeting all the required formalities and fully following the set rules and regulations. Fourthly, the entire monitoring and recovery process is made very easy and efficient with the alerts given by the system for EMI payments, for defaults, etc. Even the managers are spared of the efforts of drafting letters to customers about EMI payments, about defaults, etc, and of sending legal notices as these letters and notices are generated by the system at the appropriate
time. This drastically reduces the turnaround time. Fifthly, we can add any new products at any point of time and in pretty quick time and make it available across the bank. Finally, since the database is centralized, updating is done in real time."
Srivastava says the system is capable of countering delinquency in an effective manner because of the automated monitoring that is possible.
Arivazhagan too contends that the system is capable of proViding analysis of customer performance and feedback. This can help the credit department in assessing fresh applications from existing customers, who will ensure that they do not default. It is just not possible to have these analyses in a physical mode.
WORKFLOW
Any typical loan processing involves decisions at different levels. How is information managed in such a situation?
Srivastava says it is a workflow-based system. A loan proposal based on parameters set in the system can be decided by a branch manager, or it can if necessary go to a regional office or to the central office or to the board of directors. The concerned panel of bank officers can rate the application and record their views in the form of minutes and sign the minutes. This document is scanned and uploaded in the system. The application can be accepted and the loan sanctioned, or it can be rejected. The whole process is facilitated through a mailbox system.
"In case a particular loan is sanctioned in exceptional circumstances - we call it a case of deviation - there are provisions in the system to record the deviations to the parameters and have it approved by the concerned authorities," he adds.
Kalia of Vijaya Bank says information flow is automated in the loan automation system, through workflow mechanisms. "Automation does help in expeditious decision making as physical movement of papers is curtailed to a large extent."
Does an automated system bring in efficiency through centralization and speed to the lending process?
Arivazhagan cites the instance of HDFC: "Over the years, we have recorded an annual growth of 25% to 30%, while the growth in our manpower has been insignificant. Secondly, our assets to expenses ratio is one of the lowest in the world, that is 0.4%. This is proven efficiency and this has been possible through automation."
"A loan automation system is ideally an end-to-end integrated system, starting with lead management. In our case, even documentation is stimulated by the system, starting with collection and verification of documents, their safekeeping and their return to the customers upon completion of the loan tenure. The system generates MIS reports as well as compliance and regulatory reports for the regualtor, in our case, the National Housing Board."
Shanmugam of Mahindra Finance says surely the model
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