Banks' online loan allocation will increase 3 to 4 times during the upcoming festivals

- Emphasis placed by banks on increasing business on digital platforms

Under the tea interest rate, emphasis on digital platforms and co-financing agreements, lenders expect their lending business to reach pre-epidemic levels during the festive season this year. Since the banking system is cash rich and interest rates are at an all-time low, there will be no competition for interest rates. According to the Reserve Bank of India, the average lending rate in rupee terms in July 2016 was 7.5 per cent, which is 200 basis points lower than the 6.20 per cent in June 2021.

The Banks Association said interest rates are low and lenders have no special options. Most banks are offering similar loan schemes, so features like quality of service and fast loan disbursement have been instrumental in attracting customers.

Banks have invested heavily in the digital segment over the years to help consumers choose an integrated and appropriate loan plan with lenders. There has been a significant increase in the process of allocating loans online without meeting customers, but banks are keeping a close eye on customers' credit / transactions for this. The share of business done through digital media may be 5-20 per cent which was only 8-10 per cent before the Kovid-12 epidemic.

Digital loan disbursement will increase 3-4 times as compared to the previous period. This time special emphasis is being laid on interacting with customers through digital medium. Various offers will be made on loans given through digital medium. Initiatives will also be taken to allocate loans in partnership with finance-tech, non-backing finance companies during this festive season.

Non-banking finance companies and microfinance institutions have a long way to go in terms of loan recovery. The Reserve Bank last year revised its guidelines on risk sharing and loan disbursement through partnerships with other institutions. This is the beginning of digital loan disbursement and collaboration with other organizations.

Banks are also taking a cautious approach to speed up retail loan disbursements during the festivals. Banks are cautious and optimistic about the rise in retail loans following the loss of business due to the epidemic. The stagnant demand due to the epidemic during the festive season will give banks a new opportunity to grow their business.