The Challenge (with respect to Loan Origination)

Customer onboarding by sales teams, proposing loans and all updating activities were done manually. Customer requirements, KYC, CIBIL generation, credit approval and sanction letter were tracked in an excel sheet and basis that information, loans were disbursed to customers. All customer-related documents were handled manually and shared with customers. All these activities consume a lot of time when done manually and thus arose a need to digitalise the process through a Loan Origination System.

The Solution

Customer information is gathered and entered in the loan origination system (LOS) where personal details and loan requirements (with co-applicant if required) are tracked. Every stage of the customer journey is tracked in the system so that there won’t be any loss of customer data. The following steps are considered in the loan origination system –

1. Customer requirements
2. KYC
3. Credit approval
4. CIBIL generation
5. Sanction letter

Customer details are entered in LOS and basis the entered details, the customer journey starts until the loan is sanctioned and is at a pre-disbursal stage.

The Challenge (with respect to Mandate Management)

The mandates which are signed by users post-approval of the loan were handled and managed manually – from registration to the debit transaction as per the stages of the customer’s loan journey. The mandate details from various Loan Management Systems (LMS) were received and upon collating, all customer lists were shared with aggregators. The following steps were handled manually –

1. Mandate Registration – Mandate forms signed by customers were sent to sponsor banks (aggregator) and banks would share the mandate registration status. The status of each mandate was updated in excel against each customer. If mandates were rejected, they were resent to aggregators for re-registration. Basis the URN, each customer was identified for the loan amount.
2. Debit Transaction – Registered mandates transaction would start as per the EMI cycle. The list of customers for each EMI cycle was manually listed and shared with aggregators for hitting the transaction. Rejected transactions were resent with the consent of customers.

The Solution

The mandates are handled through systems until the customer journey is complete. Physical mandates are updated in the mandate management system (MMS) where the list of customers from the loan management system (LMS) would be collated and uploaded in MMS. The following steps would be followed –

1. Mandate Registration – Mandates from different LMS are uploaded in the MMS and merged registration files are downloaded and shared directly with aggregators. Once the registration status is received, the file is uploaded along with the status of each mandate. Then the file is downloaded and updated in the LMS against each customer. Registered mandates’ EMI cycle starts from that point onwards until the completion of the journey.
2. Debit Transaction – Registered mandates list would be received from aggregators against each EMI cycle and the same would be uploaded in the MMS as per the LMS. The merged file of all customers for a particular cycle would be sent to the respective aggregators for transacting the EMI amount. The status of each transaction is again downloaded from the MMS and updated in the respective LMS.

The mandate management system has reduced the manual work by a great degree to complete the process from mandate registration to transactions of each EMI cycle until the loan is closed/terminated.