BANKING UPDATE

HDFC Bank forays into small biz loans

 

HDFC Bank has made a big foray into small business lending with the launch of an analytics-based credit appraisal tool that will sanction working capital within an hour. All that the credit software needs is a primary bank account statement, which will be analysed for inflows and outflows. The bank is targeting 30-50% of retail loans (below Rs 5 crore) from this product.

“We have done 10-second personal loans, we have done digital loans for small business. We wanted to do something on working capital and not just for internal customers. Instead of taking five to seven days, we are going to do it across the table and three hours on the outer side for loans of up to Rs 5 crore,” said

Arvind Kapil who is the country head for unsecured, home, mortgage and working capital loans.

The bank has already tested and launched this under a pilot project and is understood to have disbursed Rs 1,200 crore in the last 12 months. It now expects monthly disbursals of Rs 400 crore.

“Assessing a self-employed through his bank statements needs risk management, advanced analytics and ability for iterated learning through intelligence in the back-end. We have this at a level where it matches the equivalent of a full-scale analysis of the businesses’ profit and loss statement and balance sheet with schedules,” said Kapil. According to him, the primary banking relationship provides a far more accurate representation of businesses than other documents.

To speed up the process, the bank’s relationship manager will be carrying a computer connected to the bank and will upload PDF documents that will be analysed at the back-end. The target segment includes those with a Rs 7-10 crore annual turnover. Those to whom the bank has lent to so far include readymade garment traders, iron & steel manufacturers and traders and agri commodities.