Personal Loan Disbursement Process

The speed of personal loan disbursement is unlike anything we have seen. Technology has fuelled this movement and continues to impact transform lending unlike ever before

The confluence of technology and finance is a game-changer. Artificial intelligence (AI), machine learning, and data analytics have revolutionised finance, helping banks and other financial institutions enhance customer experience. Thanks to technology, customers can access any financial product without moving a muscle.

From mutual fund investments to stock trading, every tool is a click away. Personal loans are equally easy to access, with every step carried out digitally. Banks can now accept applications, verify the documents, and disburse the loan amount online, saving time, effort, and resources.

Role of technology in personal loan disbursement
 

In digital lending, customers can avail of instant personal loans digitally. They do not need to visit a bank and fill an application form. The entire process can be completed on the bank’s website or mobile application.

Through the personal loan application process, customer’s past repayment records & credit history are considered to conclude the applicant’s probability of repaying the loan amount. Once the bank feels confident of lending the loan amount, the money is disbursed within hours in the lender’s account.

This was not possible with traditional lending methods. They laid greater emphasis on manual intervention, which prevented many people from accessing credit.

Explained: the digital personal loan lending process
 

Personal loans are assessed and processed at lightning speed, but how do banks do it? Let’s examine.

• People had to visit the bank and stand in long queues to apply for a loan some years back. Even after the effort, there was no guarantee they would get the loan. If they did, the personal loan disbursement process would take weeks, which would cause problems, especially during emergencies. The digital lending process has changed this, with customers now able to apply for a loan online. They can open the bank’s mobile application or website and apply for a loan. Applicants can also read up on the eligibility criteria to see if he meets the requirements. Most banks also provide loan Personal Loan EMI calculators to help customers plan their repayment even before getting a loan.
• In traditional lending, the submission and verification of documents could take weeks or even months. Digital lending does the same in a few hours, showing the value of technology. Customers must scan and upload the required documents online, following which the bank assesses their application. But with IDFC FIRST Bank’s FIRSTmoney, customer does not need to scan/upload documents online. The entire process is digital with no physical intervention required from the customer.
• Risk-assessment algorithms plan an important role in assessing personal loan applications. The algorithm helps decide whether the applicants can repay the loan. The loan amount is disbursed in the applicants’ account within hours if the algorithm gives positive output against customer’s input data. A quick personal loan disbursement process was unimaginable in the traditional method of lending.
• The entire loan disbursement process takes less than 48 hours, with the money directly reaching the applicants’ bank account. Compare this to a few decades ago, and we can see how technology has impacted lending.

IDFC FIRST Bank also has a digital lending process. The bank uses the power of AI, machine learning, and data analytics to enhance customer experience and increase the usability of its financial products. The IDFC FIRST Bank website and Mobile application app are a testament to the bank’s effort to adapt to the future of banking.

What follows after disbursement of the loan?

Loan confirmation letter
 

After the personal loan disbursement process is complete, your lender sends you a confirmation letter through SMS, email or by post. Included in a welcome package, this letter offers essential details about your loan. You will find out about your EMIs, amortisation schedule, repayment options, due date, and the means of contacting customer support for any assistance required.

Loan repayment options
 

EMI repayment options and other crucial details are mentioned in your welcome pack or sent to you via SMS/email. You can use post-dated cheques or the Electronic Clearing Service (ECS). If you already have an account with the bank from where you have availed the loan, you may arrange automatic EMI deductions through standing instructions. Just mention the specified day each month to the bank and forget about manual payments.

Remember, your responsibilities don't conclude with the personal loan disbursement process, there's more to consider. To avoid penaltie­s and maintain a good credit score, it's important to pay your EMIs.

Through the use of AI and machine­ learning algorithms, banks are able to expedite loan verification proce­dures, reduce e­rrors, and customise loan options according to borrowers' specific ne­eds. The integration of online­ applications, electronic verification syste­ms, credit scoring mechanisms, and instant disbursal has made the entire lending process more custome­r-centric, user-friendly, and hassle­-free. These technological enhanceme­nts are particularly advantageous for individuals in India where digital adoption continues to grow.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.