Money & Banking

‘Small-ticket advances to go fully digital’

Our Bureau. Mumbai | Updated on October 13, 2020 Published on October 13, 2020

The pandemic has led to the evolution of straight through processing (STP) of loans, with banks pushing pre-approved loans to the micro, small and medium enterprise (MSME) segment and small-ticket advances going fully digital, according to Rajkiran Rai G, Deputy Chairman, Indian Banks’ Association (IBA).

“For example, in the case of MSMEs, we have a back-office for processing loans. We pushed SMS to the customer that he has a pre-approved loan.

“So, the number of visits he is required to make to the branch, which would otherwise have been 5 to 6, has come down to only one visit for documentation. And in some of the cases, even that is being done away with,” said Rai at IBA’s 3rd Annual Banking HR Conclave.

Rai, who is also the MD and CEO of Union Bank of India, underscored that small-ticket advances are going fully digital. So, the number of customers and files handled at the branches will all go down.

Work from home

The Union Bank chief observed that credit is an important area of banking, which is more amenable to WFH.

“Credit processing, whether you sit in an office or home and do the processing, is highly measurable. When compared to other functions of banking, this is easy to assess.

“Because half of our balance sheet is asset creation (more than half of the work is related to credit, monitoring), if something emerges on WFH, it is not on the liabilities side but on the assets side. So, HR practices have to cope up accordingly. So, we need to look at policy changes,” Rai felt.

Rai said today every bank has a STP for loans. The digital signature and loan documentation without physical touch is gaining traction.


The human-centric business model of banks, where customers go to a branch, will not go away easily, the IBA Deputy Chairman felt. Despite digital banking, mobile banking and internet banking, customers will still go to the branch to update their passbook.

“So, the hybrid phygital model will work for some time. It may take another 5 to 10 years for the majority of the customers to shift to fully digital,” he said.

LV Prabhakar, MD and CEO, Canara Bank, said his bank used the lockdown period effectively for completing the amalgamation (of Syndicate Bank with Canara Bank).

The Bengaluru-headquartered public sector bank amalgamated the controlling offices, closing those that were not required.

“As on date, 176 regional offices we have and the same number we have also closed. We have 24 circles and the same number we have closed.

“...We used the time of the lockdown to set right all the things related to amalgamation,” explained Prabhakar.

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Published on October 13, 2020
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