Thursday, June 30, 2016

Now get loans through ATMs

The Automated Teller Machine (ATM) got introduced in India about 3 decades back. Initially, the machine that were launched as cash dispensers have over the period taken over host of other banking transactions. Today, the ATMS that are available on all corners of our cities have become an integral part of day to day banking transactions.

With the technological advancement, you can now even look at getting an instant personal loan from these ATMs. What does this mean to you?
  • Cutting out on process delays and getting easy personal loans
  • As lenders will be vying for migrating the borrowers to ATMs for operational ease and cost effective process, one can expect low interest personal loans
  • Given the wide availability of ATMS, funding can be received from any corner of the country without any hassle.   

As per the ATM Industry Association (ATMIA), there are approximately 30 lakh ATMs installed worldwide. In India, there are close to 2 lakh ATMs. 

Number of Bank ATM Machines in India
Source: TNN []

The world over, ATMs are used as an alternate channel to offer loans. Banks such as Absa Bank in South Africa and the Warsaw, Poland-based Bank Millennium are among the banks that offer this service globally. Sounds unimaginable? It definitely is not so, however! Read on to find out more.

The Reserve Bank of India (RBI) has now opened up ATMs as an alternative for banks to offer all their banking products and services via this route, provided technology supports the same. As a result, banks can now extend a loan and almost instantly disburse the money as well.  This would take the channel a notch ahead, as ATMs are open round the clock and apart from being accessible, the number of ATMs is substantially more than that of branches. As per the RBI, the volume of transactions at the ATMs using debit and credit cards at November-end 2015 was at 675.09 million and 0.49 million, respectively.

Partially modifying the circular related to ‘Relaxations in Branch Authorization Policy – Offsite ATMs’, the RBI has stated that banks have to ensure that adequate checks are put in place to prevent the channel from being misused, to prevent frauds being committed on bank customers.

Current status on model in India

In India, HDFC Bank Limited, one of the leaders in personal loan segment has recently introduced small personal loans via ATMs.

As of now, the offer will be open to existing HDFC Bank customers on the basis of their transaction details – salary credits, account balance and their credit card repayment history. The system has been fine-tuned such that after an automated assessment of the customer profile the eligibility of the customer will be determined and an e-agreement generated on the ATM screen itself. Post this; the loan gets credited directly to the customer’s bank account. For non-account holders (as may be the case for credit card holders) a banker’s cheque shall be sent across.

While this is envisaged for the initial phase of the product launch, subsequently the option of ‘Click to Call’ will be introduced, wherein customers can get a call back from the Bank within a minute. Additionally there are more features in the pipeline, including getting credit cards and top-ups on existing loans.

One of the factors taken into account while building the algorithm to determine eligibility for a loan will include the customer’s CIBIL score. This is a check that all lenders undertake when offering credit of any kind, be it a loan or credit card.

In conclusion

Technology is growing in leaps and bounds and banks and other financial institutions are accordingly making the best use of the same to churn out innovative product solutions. While as of now the personal loan is restricted to existing customer base, it does not seem to be a far-fetched dream when all types of personal loans shall be available to even non account holders. 

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