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Module 4

Uploaded by

pavithran selvam

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Module-4

Technology for Retail Banking

Technology-led innovations have become the backbone of modern-day banking,

helping effectively meet the needs of diverse sets of customers. In the past decade,
Indian banks and non-banking financial companies (NBFCs) have adopted technology
to drive growth, operational efficiency, and customer experience for retail, and micro,
small and medium enterprise (MSME) customers
Retail banking, also known as consumer banking, refers to the specific services banks
can offer to consumers–such as savings and checking accounts, credit and debit cards,
and loans. Consumers’ growing desire to access financial services from digital
channels has led to a surge in new banking technologies that are reconceptualizing the
entire retail banking market.
Modern technologies such as AI, cloud, robotics, APIs and cybersecurity are
creating opportunities for financial institutions helping banks, credit unions and
non-traditional providers introduce new products and services, improve customer
experiences, and achieve efficiencies that can save millions.
Financial institutions today are challenged with meeting consumers’ high
expectations for fast and convenient digital banking processes, while also needing
to mitigate fraud and comply with increasingly stringent regulatory requirements.
Account opening
This account can be opened by any individual provided he/she has valid KYC documents. Primarily
meant for poorer sections of society to encourage them to start saving without any burden of charges
or fees.
 Aadhaar card
 Mobile linked to Aadhaar for OTP
 PAN card
 Recent scanned
 Scanned image of address proof
 Scanned image of Identity proof
 Signature scanned-Size
 Mobile to be carried in person to branch for OTP verification while account opening.
A Loan Disbursement happens when the applicant’s request for sanction is approved. Generally, a
home loan disbursement for an under-construction property takes 2-3 business days for approval.
Let’s take a look at the steps involved in loan disbursement for various leading banks in the
country.
In India, the home loan disbursement process generally follows the following steps:
• Filling Home Loan Application Form
• Submission of Home Loan Documents
• Payment of Loan Processing fee
• Terms Discussion with Lender
• Document Collection and Verification
• Home Loan Sanction Letter
• Legal Checks and Property Verification
• Home Loan Disbursement
List of Documents required for home loan disbursement

Duly-filled loan application form

Government-issued photo ID proof
Three passport size photographs of the applicant
Proof of residence
Proof of income for non-salaried personals
Recent 6 months bank statement
Statement of any personal liabilities
Statement of Personal Assets
Signature identification
Debt settlement

Debt settlement is where a creditor gives his/her consent to forego a

certain percentage of the outstanding amount. He agrees to settle at a
reduced final figure of the total amount due. The Debt Settlement
Agreement is a written agreement between a debtor and creditor where
the debtor agrees to pay the creditor the outstanding debt due to him.
It is also known as the Debt Compromise Agreement. This agreement
can be legally enforced by printing it on a non-judicial stamp paper,
affixing the stamp duty as per the state laws, with the signatures of both
the parties agreeing to it.
Contents of a Debt Settlement Agreement

Date of the agreement.

Name and address of the creditor.
Name and address of the debtor.
Original loan amount and its date.
Rate of interest.
Due date of the loan.
Final settlement amount.
Signatures of both parties.
Signature of the witnesses.
Should You Opt for Loan Settlement?
No! Not unless there is absolutely no other option. At first glance, loan settlement may look like an easy
way out of not repaying the loan, but the consequences are detrimental. This is the case for all loans,
including personal loans.
Instead of opting for a personal loan settlement process (or any other loan), try to go for some of the
options given below-
• Try to repay the loan by liquidating your investments like Mutual Funds, Fixed Deposits, or any other
assets
• Request for an extension of your loan tenure
• If you have multiple loans running, try to consolidate them into a low interest debt-consolidation loan
• Opt for a mortgage loan or secured loan by pledging financial assets like gold, properties, etc., and
pay off the current debt
• Always have an emergency fund that can be used in situations like this
• Please bear in mind that going for a loan settlement process should be considered only when you have
exhausted all other options.
Impact of Loan Settlement Process on Your Credit Score
• Loan settlement process can negatively affect your credit history and reduce your
credit score drastically thereby limiting your chances of receiving credit in the
future.
• When you opt for a loan settlement, even if it is for a genuine reason, the amount
paid will be lesser than the original amount which reduces your creditworthiness.
Difference Between Loan Settlement And Loan Closure
• Loan closure is a term that refers to the closing of an existing loan account after the
borrower repays the loan fully on time. This will have a positive impact on one’s
credit score.1
• On the other hand, loan settlement refers to the process of a lender forgiving a part
of the borrower’s loan amount in order to help the borrower repay the loan.
Although the loan account is technically closed, since the amount was not fully
repaid, this process will have a negative impact on the borrower’s creditworthiness
and future borrowing prospects.
Loan process

As a loan processor, you put together information about a borrower and organize it
in a neat package so the underwriter can evaluate and approve the requested
mortgage. You'll open the loan file, verify the borrower's information, and submit
the package to the underwriter for an ultimate decision. Although specific steps may
vary depending on your employer and any federal, state, or local laws, the basic
steps to process a loan are roughly the same.
Contact the loan officer: Read through the application and other documents
received first to make sure you understand everything about the loan before you
get started with the processing. If you have any questions, it's better to ask them as
soon as possible.
• Enter loan information into the computer system: Enter the information you've
received accurately and completely.
• If the computer system prompts you for information you don't have in the loan file
you received, contact the loan officer as soon as possible so you can get this
information filled in.
• The computer system will generate deadlines for various processing steps to be
completed, and may send you reminders when a deadline is approaching.
• Order the borrower's credit report. If the borrower was pre-approved, the loan
officer may already have pulled the borrower's credit report and included it in the
information sent to you. If not, you'll have to order one.
• Order an inspection or appraisal: it may be your responsibility as a loan
processor to order these.
• Since inspections and appraisals can take time, if you know you need to order
them, do so as soon as possible during processing.
• The underwriter will review the inspection and appraisal to determine the value of
the collateral for the loan. Some states may have additional requirements, such as
certification that there are no termites on the property.
• Start a title search. The title search for the property will reveal whether there are
any outstanding liens or other claims against the title, which could affect the value
of the property.
Equated Monthly Installment (EMI)
Whenever we discuss loans, the first word that hit our mind is EMI.
EMI stands for Equated Monthly Instalment, the monthly payments of a
fixed amount that we pay for the loan taken. The good thing about EMI
payments is that it includes both principal and interest of the loan
amount. The interest portion adds the major portion of the EMI payment
in starting stages. However, as we go forward with the loan tenure, the
portion of the interest repayment portion reduces and the principal
repayment portion increases.
Factors affecting EMI
EMI of a loan have three major factors on which it depends:
1.Loan Amount: This stands for the total amount or the principal amount that the
individual has borrowed.
2.Interest Rate: It is a rate at which the interest is charged on the amount borrowed.
3.Tenure of the Loan: It is an agreed loan repayment time frame between the
borrower and the lender.
Features of EMI Calculator:
1.An EMI calculator calculates the amount you need to pay as EMIs in seconds.
2.By knowing the EMI amount, you can plan your budget and spending.
3.You know the total amount that needs to be paid and the rate of interest charged.
4.It helps you to know the loan tenure that suits your budget.