Banks have been speeding up loan sanctions and disbursals to borrowers in order to capture a larger share of the growing retail market.

Major lenders, such as State Bank of India, ICICI Bank, HDFC Bank and Axis Bank have reduced their turnaround time to one day and, in some cases, to even as low as 10 seconds.

Turnaround time is the time from the application of a loan by a customer till the final disbursal of the loan amount.

A few months ago, giving digitised retail lending a push, HDFC Bank, the country’s second-largest private lender, had launched 10-second, almost real-time, loan approval and disbursement, with the customer only having to click/tap on his/her Net banking account.

“It’s like having a real cheque in one’s virtual wallet…There is growing demand from digitally-savvy customers, to do away with paper work and to accelerate processes.

“Most customers expect banks to connect the dots between online and offline options to deliver convenient and consistent service,” said Arvind Kapil, Senior Executive Vice-President & Business Head ( Unsecured Loans, Home & Mortgage Loans), at HDFC Bank.

Similarly, SBI and ICICI Bank have also become aggressive on the loan-processing front and in improving customer service.

Recently, B Sriram, Managing Director and Group Executive for National Banking, SBI, said: “In this competitive environment, our bank is focusing on customer service,” and cited its work on improvement in loan processing time as one such area.

For SBI, the average loan-processing time has been squeezed to 22 days from 35 days earlier, he said, adding that in home loans where there are builder tie-ups, it can come down to seven days. Banks are enabling customers to digitally access all banking services through the internet and mobile phones, thereby, also speeding up the loan process and reducing branch banking.

More efficiency

Jairam Sridharan, President and Head - Retail Lending & Payments at Axis Bank, said, “Lower turnaround time leads to higher process efficiency, increased customer satisfaction and lower cost.”

Axis Bank’s turnaround time for auto loan ranges from six hours to a day for sanctions depending on the type of customer.

Personal loans

For personal loans, disbursements, with complete documentation, are done within 48 hours.

While for home loans the average sanction time is five working days and for disbursement another two working days (subject to all documents being submitted by the customer).

The reduction of turnaround time over the last five years has evolved quite dramatically from probably four days to six hours on auto loan sanctions.

Personal loan is evolving from a product being sold solely from brick-and-mortar set-ups to a digital environment.

With the rapidly changing e-revolution, this is expected to gain significant importance in the future, Sridharan added.