The Banking, Financial Services, and Insurance (BFSI) industry plays a vital role in India’s economy, with lending being a significant component of their business.
Lending is a paper-heavy, manual process both for FI’s and for borrowers. It requires a lot of documentation and multiple rounds of review during underwriting. Financial institutions (FI) often face the challenge of consolidating this information to complete reviews in a timely manner while continuing to interact transparently with borrowers. According to a 2023 report by CRIF the size of total lending market in India as of Mar’23 is at ₹ 198.3 Lakh crores. Every FI, when extending credit and depending on the type of credit, location and legal framework surrounding the form of credit loan must execute a contract and have necessary loan documentation (often executed on legal stamp paper) that must be duly signed both by the creditor and borrower.
Here are some common challenges banks face in loan documentation:
• Paperwork and Manual Processes: Traditional documentation often involves extensive paperwork, leading to delays and inefficiencies in processing loans.
• Compliance and Regulatory Issues: Ensuring that all documents meet regulatory requirements can be complex, with frequent updates in laws and guidelines.
• Fraud Risk: Paper-based documents are susceptible to tampering and fraud, necessitating rigorous verification processes.
• Storage and Retrieval: Managing physical documents can be cumbersome, with challenges in storage, organization, and timely retrieval.
• Inconsistencies and Errors: Manual data entry can lead to errors and inconsistencies in documents, affecting loan processing and approvals.
• Customer Experience: Lengthy documentation processes can frustrate customers, leading to dissatisfaction and potential loss of business.
• Cumbersome process of Documentation: Executions requires the physical presence of the borrower and is required to sign in multiple pages
NeSL’s Digital Document Execution (DDE) is universal contracting solution that in a seamless and secure way offer e-stamping and e-signing. DDE is designed to digitally procure stamp paper, directly from respective state governments and UTs, and execute contracts using e-sign. NeSL’s DDE aids 100% paperless execution of documents and facilitates storage and retrieval of such documents by concerned parties. DDE is revolutionising the documentation process and enhancing customer experience for credit lending across Banks and FI’s.
NeSL’s DDE facilitates execution of legally enforceable paperless documents through e-signing & e-stamping in the BFSI industry. It has the potential to be a universal contracting solution. By eliminating paper, it also promotes sustainability.
The DDE platform offers a complete package of execution, storage, retrieval and access with capabilities of e-signing and e-stamping. It offers the facility of remote and contactless execution of contracts. Contracts executed on DDE are legally enforceable as per the provisions of Bhartiya Sakshiya Adhinayam. With a single OTP, a digital signature can be added across the document in multiple pages as required for the document.
DDE is set to digitally transform the documentation process for credit lending in the BFSI industry, with the potential to become a universal contracting tool. What was conventionally a process that was
1. Time consuming (2-3 days from stamp paper procurement to submission of document and final signing)
2. Required bank customers to visit banks multiple times for paperwork
3. Require multiple signatures across a host of documents
4. Required storage and management of the paperwork for the tenure of the credit Can now be completed
1. Virtually in under 6 minutes
2. Offers customer convenience of completing the formalities from anywhere and anytime (beyond bank hours)
3. Complete document is signed with 1 digital signature using Aadhar
4. Can be stored virtually and accessed anytime without the concerns of damage
DDE had its humble beginning in the year 2020 with only a few select banks choosing to move to a 100% paperless form of document execution. Today more than 55 banks/FIs and 2 broking houses are using the platform across 27 states and Union Territories. Over 29 credit lending product/service offerings by Banks and NBFC’s are today being executed using NeSL’s DDE. (as on 31/10/2024)
For the first Million, the average DDE transaction per day was a little over 1000 and the first Million was achieved in 911 day. The last million (10 million) was achieved in just 39 days. At present, the DDE transactions per day is 40,000+ (as on 31/10/2024)
DDE also contributes to sustainability as it is executed in a 100% paperless fashion, with digital storage and record management. Till date 1 Crore DDE transactions have been executed; transaction if it were executed in a paper format. This has resulted in a the BFSI industry contributing to the savings of 30,000 trees that would have been cut to produce the paper required to execute 1 crore DDE transactions. (Avg 25 pages/document with 1 tree made into 8,336 pages)
The National Strategy for Financial Inclusion an initiative by GOI to ensure financial access & services for all citizens. One of the biggest challenges faced by Banks in offering services in rural India is accessibility & reach. DDE fills the gap by powering financial inclusion (FI) schemes like PM Svanidhi, PM Mudra, Agri Loans etc through banks & creditors to help rural India. As DDE facilitates digital execution of agreements with e-stamping & e-signing completed virtually & from anywhere, it has been leveraged for a host of Financial Inclusion initiatives by banks and FI’s. Till date FI loans valued at ₹4,676 Cr have been disbursed
with help of contracts executed through DDE. Financial inclusion contributes to 8% of the total DDE transaction and is growing at nearly 17x year on year.
Electronic Bank Guarantee (e-BG) is an important and a unique offering under the DDE platform. NeSL’s e-BG eliminates the physical documentation associated with issuance and all life cycle events like amendment, cancellation etc of a Bank Guarantee (BG). It reduces the overall turn-around time for BG issuance. As the e-BG is available in a digital form on the NeSL portal through a secure access, it reduces the risk of frauds, forgeries etc.
NeSL’s e-BG project was initiated in close consultation with the Indian Banks’ Association in 2020 and successfully launched in September 2022. The amendment of the General Financial Rules 2017, Ministry of Finance, Government of India to accept e-BG for all government contracts across departments has further strengthened the cause to promote e-BG as a key digital transformation move from conventional bank guarantee.
NeSL’s DDE had won the award for Business Excellence at the Dun and Bradstreet Business Excellence awards, the Best RegTech solution at the BusinessWorld Festival of Fintech Awards 2023 and Best Innovation in RegTech, IFTA 2022.
Chief Strategy & Marketing Officer, NeSL
