1. Data Collection - Using information obtained from various sources about the borrower, the lender will focus on key parameters such as credit history, cash inflow, collateral, and character.
2. Minimum Risk Assessment Criteria - Borrowers are evaluated based on various factors such as age, income, pin code, and so on in order to keep loan default percentages to a minimum.
3. KYC - The process of collecting and analysing borrowers' documents, such as Proof of Address (POA) and Proof of Identity (POI).
4. Credit Bureau Check - Used to determine borrowers' credit scores based on factors such as credit repayment history, credit usage history, current loan portfolio, credit line tenure, credit inquiries made thus far, and so on.
5. Loan Underwriting - Borrowers' creditworthiness is determined by a risk percentage based on credit score, debt, income, and collateral value.
6. Video KYC - Borrowers' identities are verified based on conditions such as geotagging, borrowers only in the specified location, only trained loan officers to carry out the process, liveliness check, image capture to validate against the borrowers' documents, and so on.
7. Loan negotiation - The process by which lenders and borrowers agree on the final terms of a loan.
8. E-Mandate - Enables lenders to collect repayments from borrowers in a series of steps automatically.
9. Loan Contract - A written agreement with terms and conditions that are signed. The document contains basic information about lenders and borrowers, loan specifics, repayment methods and time frames, acceptable payment methods, interest rates, and so on.
10. Loan Disbursement - Lenders make loans available to borrowers.
Check out the blog “10 Stages in the Loan Origination Process” for more information.