HDFC Bank, which is a leading private sector lender in the country, has recently made a foray into issuing small business loans. The lender has launched an analytics-based credit appraisal tool, which is said to sanction the working capital within 1 hour. To sanction the loan, the credit software will require a statement of the applicant’s primary bank account, which will then be analysed for outflows and inflows.
HDFC Bank is targeting between 30% and 50% of retail loans under Rs.5 crore through this product. The private sector lender has already tested this product and launched a pilot version of the same. The bank has disbursed nearly Rs.1,200 crore to applicants during the past 12 months. HDFC Bank is currently targeting monthly disbursals of around Rs.400 crore.
Mr. Arvind Kapil, who is the bank’s country head for unsecured, home, mortgage, and working capital loans, has said that assessing a self-employed individual through their bank statements alone requires advanced analytics, risk management, and the ability for iterated learning via intelligence in the back-end. He added that the bank has the technology to do this at a level that matches a full-scale analysis of a business’ balance sheet with schedules and profit and loss statement. According to Mr. Kapil, the primary banking statement offers a more exact representation of a business, in comparison to other documents.
To hasten the process, the concerned relationship manager from HDFC Bank will carry a computer that is connected to the bank. The PDF documents, which will be uploaded by the relationship manager, will be analysed immediately at the back-end.
The target segment for the loan includes those who have an annual turnover that ranges between Rs.7 crore and Rs.10 crore. HDFC Bank has already issued loans to iron and steel manufacturers, readymade garment traders, etc.
Source: The Times of India