Public sector banks are reportedly considering a common portal to offer instant personal, housing and other retail loans to their borrowers based on individual credit-worthiness.
"Brick-and-mortar branches will progressively become redundant. This portal will have simplified forms and processes to help borrowers get faster approvals on their application," a senior finance ministry official told The Economic Times, adding, "This is the next phase of banking where customers can avail of loans quickly and don't have to run around waiting for approvals." The move will also help deepen financial inclusion. As the source pointed out, the government first introduced the Pradhan Mantri Jan Dhan Yojana to make formal banking more inclusive and now it is time to scale it up.
"There have been some discussions, PSBs (public sector banks) are encouraged by this idea and they will talk among themselves on how to get this operational. We will provide them support if so required," said the official.
The proposal, still at a nascent stage, envisages borrowers filling in relevant details online, based on which they will subsequently receive competitive offers from interested lenders. There might even be a common checklist which the banks can use to assess the borrower's creditworthiness. The report added that, at a later stage, the common portal can also be leveraged to push loans to small and micro industries. Banks have already been directed to decide on loan applications from micro, small and medium enterprises (MSMEs) in a fortnight.
This development comes against the backdrop of private banks stealing the march over the PSBs in terms of the loan books. State-owned banks are struggling to expand their loans portfolio despite making up 70 per cent of the Indian banking system - their average credit growth in the year through March 2018 was reportedly just 4.7 per cent, compared with 20.9 per cent for private banks. The common portal concept could help reverse the trend.
In any case, the Centre wants PSBs to use new financial technologies to make business transactions quicker and hassle-free. Based on the recommendations made by PSB whole-time directors and senior executives at the PSB Manthan last November, the government unveiled a reforms agenda for the state-owned banks earlier this year termed EASE ( Enhanced Access and Service Excellence).According to an Assocham report, the agenda focusses on the following six themes: