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Showing posts with label Online Loans. Show all posts
Showing posts with label Online Loans. Show all posts

Wednesday, September 28, 2022

Axis Bank leverages the Account Aggregator Framework to grow its Loan Book

Axis Bank leverages the Account Aggregator Framework to grow its Loan Book

          The Account Aggregator (AA) framework is gathering speed in India. In the last couple of months, almost all major Banks in India have onboarded the AA platform.

          The AA platform enables financial institutions as FIUs to seek banking account information of FIPs via the AA channel.

          Please note Financial Institutions are expected to be FIPs and FIUs

          The full form of FIP is Financial Information Providers

          The full form of FIU is Financial Information User

          In AA terminology, FIPs are the institutions having customer financial data and can share it to FIU or customer through Account Aggregators (AA). Ex – Banks, NBFC, Mutual Fund depository, Insurance Repository etc. As on date Banks, a couple of NBFCs have onboarded AA as FIPs

          In AA terminology, FIUs are institutions that consume the data from a FIP to provide various services to the end  consumer.

For e.g. a lending Bank wants access to the borrower’s data to determine if a borrower qualifies for a loan. The lending Bank is the FIU. Banks play a dual role – both as a FIP and an FIU. Ex – Lending firms, personal finance, wealth management companies



The 4 major benefits of this are: -

Benefit 01) In a strategic move, Axis Bank has onboarded multiple AA Apps as FIPs. These enable Axis Bank to leverage the FIUs features to grow its loan book.

Benefit 02) As the Bank Account Statement is retrieved through a secure channel, there are NIL chances of data manipulation. This removes the numerous steps associated with Bank Account Verification process

Benefit 03) The FIU features can be leveraged by any Financial Institution if it is already a FIP on the respective AA App. It is a Give and Take feature

Benefit 04) The sourcing teams can focus on quick disbursement of the Loan rather than focus on the Bank Account verification process.

 

As an example, Axis Bank is a FIP in one of the AA Apps.

On the same app, apart from Axis Bank, the following banks are also live: -

Karnataka Bank Ltd

Punjab & Sind Bank,

AU Bank

UCO Bank

YES Bank

HDFC Bank,

Canara Bank

Federal Bank

IDFC First Bank

Indian Overseas Bank

Karur Vysya Bank

IndusInd Bank

Union Bank of India

Bank of India

ICICI Bank

These means any of the above Banks can request account holders of other banks to share their account details via the FIU module.

These opens up endless possibilities to speed up the Loan sanctioning process

 

Brilliant, isn’t?

 

          As the Joy of AAs spreads around, more and more bank account holders will see a reduction in TAT for their Loan applications. This in turn will encourage more folks to route their transactions via formal banking channels.

          Copyrights, if any belong to the original copyright holder only.

          Additional Reading:

Axis Bank - 24x7 Personal Loans made easy with Account Aggregator dt.April 18, 2022 @ https://www.axisbank.com/progress-with-us/money-matters/borrow/how-account-aggregators-make-24x7-personal-loan-applications-easier

Axis Bank starts digital lending through Account Aggregator Framework dt September 22, 2022 @ https://www.axisbank.com/about-us/press-releases/axis-bank-starts-digital-lending-through-account-aggregator-framework#:~:text=Account%20Aggregators%20are%20entities%20licensed,in%20democratizing%20access%20to%20credit.%E2%80%9D

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing Less.  

Friday, September 9, 2022

Finance Minister Smt. Nirmala Sitharaman unveils Seven Steps to fight “Illegal Loan Apps”

 

Finance Minister Smt. Nirmala Sitharaman unveils Seven Steps to fight “Illegal Loan Apps”

          India’s Ministry of Finance today i.e09/09/2022 released a Press Release on “Illegal Loan Apps”

          As per the Press Release; - Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman chaired a meeting on 08/09/2022 to discuss the various issues related to “Illegal Loan Apps” outside the regular banking channels.



In Attendance: -

·       Finance Secretary, Ministry of Finance; Secretary, Economic Affairs;

·       Secretary, Revenue, & Corporate Affairs (Addl. Charge);

·       Secretary, Financial Services;

·       Secretary, Electronics & Information technology;

·       Deputy Governor, RBI;

·       Executive Director, RBI.

 

The following 7 steps are the proposed approach to minimise the impact of “Illegal Loan Apps” in India.

Step 01) RBI will prepare a “Whitelist” of all the legal Apps and MeitY will ensure that only these “Whitelist” Apps are hosted on App Stores.

Step 02) RBI will monitor the ‘mule/rented’ accounts that may be used for money laundering

Step 03) RBI to review/cancel dormant NBFCs to avoid their misuse.

Step 04) RBI will ensure that registration of payment aggregators be completed within a timeframe and no un-registered payment aggregator be allowed to function after that.

Step 05) MCA will identify shell companies and de-register them to prevent their misuse.

Step 06) Steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders.

Step 07) All Ministries/Agencies to take all possible actions to prevent operations of such Illegal Loan Apps.

Read the full press release @ https://pib.gov.in/PressReleseDetail.aspx?PRID=1857998

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing less.

 

Thursday, August 25, 2022

Google removes over 2000 Loan Apps in 2022

 

Google removes over 2000 Loan Apps in 2022

          The preferred way to borrow money digitally is through the APPS available on the Google Play Store.

          Google Play Store or Google Play is Google’s digital distribution service.

          Google launched Play Store in 2008 and over the years is the most preferred platform for a wide variety of Android Apps



          Google Play Store has three major categories i.e Games, Apps and Books.

          There are various sub-categories under the main categories.

          Few Examples are:

Games --- Action / Adventure / Arcade and so on

Apps --- Watch Apps / Beauty / Finance and so on

Books --- Ebooks / Audio books / Comics and so on

          Saikat Mitra, Senior Director and Head of Trust and Safety, Google APAC (Asia Pacific region) said the company is committed to complying with regulations in all jurisdictions it operates in, and termed online harm as a "global phenomenon".

          The nature of ‘loan app’, varies from geography to geography.

          The US market, for instance, has a problem of predatory loans, while in India it is a combination of misrepresentation, non-compliance with policies and regulations, and improper offline or "real world" behaviour of such apps on recovery and other actions.

Extract from support.google.com page

Additional requirements for personal loan apps in India, Indonesia, and the Philippines

Personal loan apps in India, Indonesia, and the Philippines must complete the additional proof of eligibility requirements below.

India

Complete the Personal Loan App Declaration for India, and provide necessary documentation to support your declaration.

For example:

If you are licensed by the Reserve Bank of India (RBI) to provide personal loans, you must submit a copy of your license for our review.

 

If you are not directly engaged in money lending activities and are only providing a platform to facilitate money lending by registered Non-Banking Financial Companies (NBFCs) or banks to users, you will need to accurately reflect this in the declaration.

In addition, the names of all registered NBFCs and banks must be prominently disclosed in your app’s description.

Ensure that the developer account name matches the name of the associated registered business name provided through your declaration.

Personal loans: -

We define personal loans as lending money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing purchase of a fixed asset or education. Personal loan consumers require information about the quality, features, fees, repayment schedule, risks, and benefits of loan products in order to make informed decisions about whether to undertake the loan.

**

In May 2022, Google announced that it has updated its developer policy for Google Play.

 

The tech giant has announced that it now requires personal loan apps in India to complete the additional proof of eligibility requirements. The updated policy comes into effect from May 11.

 

According to Google Play Store policies, a personal loan app is defined as one which "lends money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing the purchase of a fixed asset or education."

 

These additional proof requirements are applicable to India, Indonesia, and the Philippines

 

Additional Reading:

https://www.indiatvnews.com/technology/news/google-play-got-rid-of-2k-controversial-personal-loan-apps-know-more-2022-08-25-802979

 

Copyrights rest with the original copyright holders only.

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More - Nothing Less.

Saturday, April 25, 2015

The next eCommerce Frontier in India – Overdraft Finance for Shoppers


          The chief inspiration for today’s blog Post is the Star Trek Quote – “Space - Where no man has gone before"


          The eCommerce arena in India is witnessing an explosive growth with the pool of Online Shoppers increasing every minute.    
     
          This Forbes article reflects the trend.  

          One of the main reasons as to why shoppers still prefer mom and pop retail stores is the informal overdraft facility.

          Any reasonable sized mom and pop store offers overdraft facilities ranging from INR 250\-to INR5000\-.

          These overdraft facilities are offered without any security and are based on trust.

          The default levels of such overdraft are very low.

          Today’s post explores the market and the process flow for introducing Overdraft facility for online shoppers.

Q: What is an Ovedraft?
Ans:  Overdraft is an Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which the account holder can write checks or make withdrawals. An overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance.

The most famous overdraft facility in India is the PMJDY Overdraft facility.

Q: How different is from EMI financing?
Sr No
Overdraft
EMI Loan
01)
This is like a revolving credit. There can be Debits (Withdrawals) and Deposits (Credits) in the account. Debits (Withdrawals) can be made upto the set limit.
Single Debits (Withdrawal), multiple credits
02)
Interest is charged on the daily withdrawal outstanding at the end of every month.
Interest is collected along with part of the Principal every month.
03)
Petty shopkeepers or Wholesale shopkeepers offer informal overdraft facilities. The interest portion is built into the selling price.
EMI Loans are offered by Banks or financial institutions.


Q) What are the finance options available to Online Shoppers in India?

Ans: The most common finance options in India to Online Shoppers are the EMI loans from the Credit Card Companies.

These EMI options are available only for the respective credit card holders only. New online shoppers cannot avail the EMI options.

Check out on this Google Search for more information on EMI Options.

No Finance Company in India offers Overdraft facilities, more so for online shoppers.

A couple of finance companies do offer EMI loans to online shoppers. Check out here for one such tie up between an eCommerce Company and a Finance Company.

This tie-up is a mix of online and offline model.

It is not a full fledged online model.

The following is a full-fledged model.

01) Customer profiles are created based on eKYC and allot unique customer codes.
02)                  Fix overdraft limits as per risk profile of the customers.
03)                  Obtain NACH (Debit) mandate for recovery of the monthly interest. The upper limit can be fixed as per the Overdraft Limit of the customer.
04)                  Tie up with eCommerce companies wherein the customers can interact with the finance company to finance his/her purchases till the eligible limit.
05)                  Raise alarm when the NACH(Debit) transaction is returned with any reason; financial or non-financial reason.

This Model is most suitable for Finance Companies, though Banks can also consider adopting it.

This model has the following benefits:-
a)    Increase the pool of new customers for eCommerce companies.
b)    Increase the pool of new customers for Finance companies.
c)    Encourage online customers to build a positive credit report.
d)    Encourage Digital India Transactions.
e)    Introduce advanced fraudulent detection techniques.  
f)    Introduce new earning streams for eCommerce/Logistics personnel.
g)    eCommerce companies need not invest for finance.
h)    The processing charges, if any, can be paid by the eCommerce companies if the purchases are beyond a specified level.
                   
Check out this Google search results for the various contours of ecommerce in India
         



Tuesday, September 4, 2012

Now file your Loan Applications online. Would you like to try?



One more step towards innovative customer service.

            Public Sector Banks in India, have been advised by Government of India-Ministry of Finance-Department of Financial Services vide Lr.No.F.No.11/17/2011-FI, to introduce the Online filing and tracking of Loan Applications.

            The major advantage of online filing is the increased transparency coupled with a tracking mechanism.

            As a pilot run, a group with officials drawn from Punjab National Bank, Allahabad Bank and Syndicate Bank was constituted to develop the necessary IT applications.

            The group developed and tested few IT applications in their respective banks. As the results were satisfactory, the online filing/tracking of loan applications was adopted by the above banks.

            As considerable work on development and implementation of these IT Applications was done by the Group, Department of Financial Services- MOF felt it would be better for all the PSB’s to adopt them, rather than develop on their own.

            This would lead to faster rollout of the online filing/tracking of loan applications and also the collective wisdom can lead to system efficiencies.

            Accordingly, PSB’s have been advised to integrate the IT Applications relating to online filing/tracking of loan applications with their bank’s system, by 31st August 2012. Banks may make the necessary modifications as required.

            A snapshot of loans for which online filing can be introduced are: -
Education Loan
MSME Loan
Vehicle Loan
Kisan credit card
Farm Mechanization loan
Dairy Development loan
Kalyani card
Housing Loan
Professional & Self Employed
Personal loan
            The bank customers to reduce the time in online filing should have all the required information and the scan copies of the documents, prior to the commencement of process in the respective banks website.

Once the application is filed successfully, the registration number will be displayed. Further tracking can be done on the basis of the registration number.

Bank of Baroda online Education Loan, Union Bank of India Education Loan, Syndicate Bank online Loans,

Directorate of Institutional Finance, Madhya Pradesh online loans, Allahabad Bank online MSME  Loan,
             

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The thoughts in this BLOG are personal, and reflect only my view on the subject.
This are not the views of my Employers.
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All efforts have been made to make this information as accurate as possible, N Prashant will not be responsible for any loss to any person caused by inaccuracy in the information available on this Website. Relevent Official Gazettes Communications may be consulted for an accurate information. Any discrepancy found may be brought to the notice of N Prashant