RBI Guidelines For NBFC | KYC Guidelines For NBFC 2019

RBI Guidelines For NBFC

RBI Guidelines for NBFC enhance the safety, security and operational efficiencies of all NBFCs the RBI has issued directions on the ‘Information Technology Framework for the NBFC sector’ on June 08, 2017.

• While evolving technology ecosystem and enhanced dependence on technology, analyzing the risks associated with legacy systems and inefficient IT management the Central bank is pushing for better planning and management of Information and data of NBFCs.

• Taking a holistic view of IT and its importance the guidelines include suggestions on Business Continuity Planning, robust IT Framework, Policy formulation, and audit.

• The directions apply to non – deposit taking NBFCs – NBFC SI and NBFC Non-SI. The RBI has very strategically called for all NBFC to form a committee with Senior Management to lead and take a holistic view of the current IT infrastructure, Design and Deploy a sound IT policy that considers requirements, risks and rewards for the company.

• Today Non-Banking finance companies are driving the growth of the country by serving the underserved and unbanked with their extensive network and sound customer engagements. Their growth and profitability need to be linked with the acceptance and implementation of a good software to manage their customers and loans.

• With the evolution of technology from Server to Cloud, desktop to Mobile and DOS to Android a large gap has been created. 

• Many businesses are still dependent on redundant and obsolete hardware's and software like Loan Management & Loan origination systems that fail to capture and process information that is relevant today. 

• Importance of Data and its interpretation of business insights is unchallenged, companies that use data to its advantage are more successful and profitable than those who depend on incompetent systems.

• NBFCs possesses very critical and confidential data whose security can be compromised. 

• The guidelines stress that ‘Information is an asset to all NBFCs and Information Security (IS) refers to the protection of these assets in order to achieve organizational goals’ and very rightly it has advised the NBFCs to frame an IT & IS Policy that considers Confidentiality, Integrity, Availability & Authenticity.

• NBFC should consider developing a system that is safe, secure and smart, a system that not just controls risks but is cognitively advanced to avert risks. 

• Providing access to information to users based on need, creating responsibility of actions by Business Process Management enabled applications, ensuring physical and virtual security of data and maintaining proper audit trails will help them in maintaining data Authenticity & confidentiality.

• Cybersecurity and Cyber crisis management is the most pertinent topic that needs to be addressed while considering IT & IS. 

• With the world over the internet, it is a staple that cannot be avoided. 

• Mobile technology and the sharing of information on multiple systems and locations that enable businesses to harness the power of technology need to be secure. 

• Data needs to be transferred and stored with utmost powerful DB management tools, securing data with multiple firewalls and hosting the data at secured Data Centers like AWS, MS Azure or other cloud data centers should be evaluated for their merit.

• NBFC big or small should invest in a good IT partner that can advise and help them establish a controlled and dynamic environment for growth. 

• With the evolution of cloud technology and secured Data Centers where multiple Data backups and instances can be stored are very useful in creating a sound Business Continuity Plan. 

• Disaster recovery experts are betting on the cloud that promises a very aggressive response time in case of any incident.

• Technology and its optimum use will be the most important growth drivers for any business and in such businesses where data is the only asset you have, and this makes technology the most profit center to invest it. 

• With a robust application, Management can monitor day to day activities, map data derivations to policies and invest time in growth.

• The RBI with these guidelines has created a 2 point agenda for the NBFC one that stresses on Importance of IT & IS and other impresses upon them the importance of the use of IT. 

• With the highest authority making an open call for IT readiness all NBFCs should conduct a comprehensive analysis of their current software and be ready for the future. 

Reference:http://bit.ly/2CxvtAX

Top NBFC’s In India 2019 | List of NBFC Companies

List of Top 9 NBFC Companies In India 2019

Top NBFC in india that are offering a variety of services. A company registered under the Companies Act, 1956 engaged in the business of Loans and advances,acquisition,shares/stocks/bonds issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase
construction of immovable property.

According to research and studies, NBFC’s in India are outperforming banks. NBFC’s in India are playing a major role in the financial sector contributing 12.5% growth in India’s GDP. People are preferring NBFC’s over banks as they find them safe, efficient & quick in assisting with financial services.

List of non banking financial companies in india.

HDB Finacial Services

Power Finance Corporation

        Bajaj Finserv

Mahindra & Mahindra Financial Services Limited

                   Muthoot Finance Ltd.

Cholamandalam Investment and Finance

Shriram Transport Finance Company Limited

Loan Origination Process Steps | Stages of Lending 2019

                                           7 Stages In Loan Origination

Loan Origination Process Steps is the most important & critical stage in the complete Loan servicing of Lending/Financial services.

The Finance Industry is now shifting its focus on Customer engagement & Satisfaction with the elements of design & delivery that fulfills customers’ expectations first.

 For almost every lender the definition of the term Loan origination is different – where it starts, the different stages within the process and where it ends. Every Loan type will have a different approval process that can be manual or automatic.

Lenders have their “secret sauce” when it comes to Loan Origination that they never want to share as Loan origination is what makes Companies stand out from their Competition.

Loan processing System is responsible for managing everything from pre-qualification to the approval of funding the loan.

Loan Origination Process steps:

1) Pre-Qualification Process : 

This is the first step in the Loan origination process.

At this stage, the potential borrower will receive a list of items they need to submit to the lender to get a loan.

This may Include :

 • ID Proof / Address proof: Voter ID, AADHAR, PAN CARD
 • Current Employment Information including Salary slip
 • Credit Score
 • Bank statement & Previous Loan Statement
 • Tax Returns Once this information is submitted to the lending company, Lender reviews the documents and a pre-approval is made, allowing the borrower to continue in the process to get a loan.


 2) Loan Application :

This is the second stage of the Loan origination process.

In this stage, the borrower completes the loan application.

Sometimes this application can be paper-based, but today lenders are shifting towards an electronic version that makes this stage Paperless.

New technologies allow completing the application online through website & mobile app, and collected data can be tailored to specific loan products.



 3) Application Processing :

At this stage, the application is received by the credit department and the first step done by the department is to review it for accuracy, genuine & Completeness.

 If all the required fields are not completed, the application will be returned to the borrower or the credit analyst and they will reach out the borrower to procure the missing information.

Lenders use LOAN ORIGINATION SYSTEM (LOS) to know the creditworthiness of the borrowers.

A good LOS will help a lender setup workflows to process a loan. It can automatically flag files with missing required fields, return it to the borrowers and notify sales/Credit department to rework.

Depending on the organization & product, exception processing might be a part of this stage. Loan Origination Software.


4) Underwriting Process :

When an application is totally completed, the underwriting process begins.

Now Lender checks the application taking a variety of components into account: credit score, risk scores, and many lenders generate their own unique criteria for scoring that can be unique to their business or industry.

Nowadays, this process is fully automated with the help of a rule engine & API integrations with Credit scoring engine (CIBIL, EXPERIAN etc. ) in LOS. In a rule engine, the lender can load underwriting guidelines specific to products.


 5) Credit Decision : 

Depending on the results from the underwriting process, an application will be approved, denied or sent back to the originator for additional information.

If certain criteria don’t match according to the rule engine set in the system, there can be an automatic change in the parameters, such as reduced loan amount or different interest rates.


 6) Quality Check :

Since lending is highly regulated, the quality check stage of the loan origination process is critical to lenders.

The application is sent to the quality control team, that analyze critical variables against internal and external rules and regulations.

This is the last look at the application before it goes to funding.


 7) Loan Funding :

Most loans fund shortly after the loan documents are signed. Second mortgage loans, Business loans, Loan against property and lines of credit may require additional time for legal and compliance reasons.

LOS can track funding and ensure that all necessary documents are executed before or together with funding.


 Checkout AutoCloud- Loan Software for lenders to know how it can help you enhance customer experience and let you customers get loans in less than 5 mins.

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4 Pillars Of Digital-Lending | NBFC Business Model

                    NBFC Business Model and pillars of Digital Lending

NBFC Business Model in india now a days looking forward for Digital Lending Platform which gives your real-time services.

If you look at today’s customer, they don’t compare different financial service providers anymore, they compare Experiences.

Now, Consumers lives are better than ever, with smart digital services being delivered by smartphone.

Booking a taxi, planning holidays, shopping online – It’s all easy, instant and seamless. Today, Customers can buy products and services in few clicks and more importantly, unhappy customers can switch service providers in the fraction of seconds.

The digital-first model has changed the lending Industry forever.

This approach has changed the way how people consume financial services and helping companies become an active part of a customers’ digital life.

To survive when giants like Google make their way into people’s financial lives, NBFC’s must have the right framework in place.

This framework is the digital-first platform on Cloud, supported by Four pillars – Omni-channel Lending, modular Lending, smart Lending, Strong Collections management.

NBFC Business Model According to NBFC Report 2019 Includes:

Pillar One: Omni-channel Lending

Do you remember the traditional approach with soiled channels (branches, house visits, calling etc)? That approach was neither customer friendly, staff friendly nor efficient.

These channels respectively needed their own raft of workflows, content, screen design and other supports, meaning the same functionality is redone many times, with the end results that don’t relate to channels.

It makes sense to do everything at once, and manage all the channels via a central hub.

What’s needed to become a Digital-First NBFC? A central cloud based omni-channel NBFC Software for digital lending to manage interaction across multiple touch points i.e Website, Mobile Apps, Branch etc.

 Over 77% of NBFC consider their current systems as the biggest roadblock to their digital transformation,  while over 50% see them as a medium roadblock to capitalizing on digital opportunities.

Pillar Two: Modular Lending

The ola’s and flipkart’s of India introduce clever new features – quickly and at almost zero marginal cost.

They are agile enough to exceed customer expectations without any major implementations and cost implications.

They easily roll out new services and scale them up or down at will. When it comes to financial service providers, they fail in designing products quickly and launching them.

A modular architecture for NBFC’s will lead to innovation in the same way and in-line with the customer needs.

A strong digital lending platform for NBFC’s with advanced rule-engine and Business process management will help make a modular architecture, that empowers lending institutes to go beyond responding to market realities, to quickly create niche products – in conjunction with the consumers.

A strong Technology platform will empower Agile operations , Transparency , Customer- focused design and products.

Pillar Three: Smart Lending 

From a normal phone to a smartphone. Tv to a smart Tv, car to Driver less Car (Tesla) etc.,

Now everything and everyone is smart. Then why not Smart NBFC?

The secret to getting everything smart is effective use of Data and building Ecosystem as a business model NBFC’s should do effective segmentation, targeting and tracking by collating data from various source and analyzing it to create actionable insights.

Big data is the engine that drives all of these efforts and to make effective use of data, Companies need to invest in new skills – Data Scientists.

This will lead to high fixed expenses as the skill is very Costly.

To reduce fixed expenses, use a smart lending platform with Analytics to leverage all the data to translate into customers and business insights.

Pillar Four: Strong Collections Management:

It is very important for lenders to keep a track of customer location, behaviours and be in regular touch through various channels.

Recovery has always been a major problem for lenders and their employees.

By deploying a smart collections management software(CMS), NBFC’s can build effective communications with customers by automated email, SMS, telephone reminders, Mobile app with instant payment integrators.

Collections Management System will also help recovery team to reduce NPA’s Automate collections, track ground collections and Geo-Tag Locations.

The end goal is to create more efficient operations, higher profits and happier customers.

NBFC’s are already operating within an entirely new financial ecosystem and they must transform their business models to respond and stay relevant.

 In doing so, they have four key pillars for success at their disposal – Omni-channel Lending, Modular lending, Smart Lending, and Strong Collections Management.

5 Reasons Why NBFC’S Must Embrace Smart banking Technology 2020

New Banking Technology Innovations

The NBFC Technology sector in India is revolutionizing. Industry experts believe that the lending market is as big as $600 million and is further growing at a rate of 19% -21%. Alternative lending firms, popularly known as Non-Banking Financial Company (NBFC) are contributing greatly to the growth of Indian Economy. To ride this growth wave efficiently, it is very important for NBFC’s embrace Smart Technology.

All major NBFC’S have made their way to the top mainly due to the ability to innovate, customize their products based on the needs of their Clients, Agility in workflow and Lowering down operational costs. This ability in them has been born by adopting Cloud-based lending software with features like paperless loan sourcing, giving access anywhere anytime, strong Business Process Management, Lending Analytics built with Artificial Intelligence, Omni-channel sourcing and Smart Collections.

Here are 5 reasons for the future of Smart banking technology:

• India is a very diversified & widespread Market, and reaching people in rural areas is not an easy task. Build a strong reachability by embracing evolving technologies and by moving from legacy systems to Cloud & Artificial intelligence. that can assist NBFCs to access customers effectively. This will help to expand the customer base and Cut down operational costs.

• NBFCs in today's market have to be creative and offer products that suit the rapidly changing requirements of consumers. A CRM system in lending business can help, understand customer needs, Track leads with real-time updates, increase awareness with tailored automated messages & emails and build long-lasting relationship with Customers.

• Lending companies in Today’s world have to be Agile & Secured, to be away from frauds. Tools like Business process management will help you deploy defined rules for lending and workflow processes for the internal team to accept, reject, disburse loans and collections management. From Loan origination to Loan servicing, all run under define rules and workflows by the senior management. This will save NBFC’s from frauds and build a fraud-free customer base.

• Competition is increasing in the NBFC market, as everyone is trying to understand customers and needs. How you can be one step ahead of them? By learning lending data efficiently with the help of AI, ML and Analytics can help you track product performance, Customer performance, customer choices, trends, Behavioral patterns in lending and re-payment. A smart system like this will give you Informed Decisions, new product ideas, and strategies to grow your business network.

• Being in lockstep with technology also enables NBFCs to be compliant with new policies and initiatives. RBI initiatives like Direct Benefit Transfer or Aadhaar Pay require extensive use of smartphones and involve a lot of data. Setting up mobile-friendly platforms and data capturing systems is beneficial not just for the customer but also for NBFCs. AutoCloud Enterprise is the right suite/configurable solution helping 300 lenders do Smart lending. Our solution manages end-to-end loan life-cycle with 4 module ACE Aquire (Loan origination system), Ace Enhance (BPM), ACE Collect(Collections Management), ACE Analytics(Analytics system with AI).

Talk to us and schedule your free NBFC software demo: Click here

Cloud Consulting Services

Are you tired of having to organize your business and manage your IT? Why worry about having to manage old servers or tiring manual papers when IT cloud services have data centers’ with high-end security. Our objective is to develop your strategy as affordable and we have best-written plan for your business to perceive. Best of all you can access your data anytime and anywhere with the single click of a mouse. We broaden your business with cloud solutions and offer a comprehensive cloud computing service that includes high-level strategy consulting. We also study various different elements and take a customer-centric approach to address specific key issues for customers today and helping them expand their point of view and also keeping in mind where they want to go in the future and how are they solving business problems today and how we can take a step by step approach to make a business impact positive direction for them.

One of the key areas is we have been able to address our customer concerns today is what is cloud and what does it mean to me. We hear different answers from different vendors .we bring specific people from technology experts, senior-level cloud consultants, industry consultants beside from It, finance people as well and bring those leaders and minds together driving innovation and adoption through their business together in a room and to help guide customers through various issues they are currently facing today.

We, consultants, strive to define a right mix of technology and cloud together to support your business. This might be tough, but transformations can be best done with strong Cloud professionals. We spend a lot of time working with customers and exactly we know what questions they have on their minds. Our aim is to help you choose the best cloud technologies and map out the strategy that meets customer’s requirements. We have expertise in providing a full suite of cloud services for your business.