Moving on from lending standards, banks are likely to focus on future cash-strapped lending, said a senior UCO Bank official. Banks will focus on future mortgage lending and this has been initiated by SBI, Ajay Vyas, CEO, UCO Bank said in a discussion at the Redefining Corporate Financing forum in New Normal organized by Ph.D. Room December 23, 2020.
Various SBI officials have promoted loan models based on traditional or standard-based loans. In a mortgage loan, a financial institution provides a loan based on past and future cash flows to the recipient.
The banking system should not shift its focus to retail only as the sector is likely to have an economic downturn, State Bank of India (SBI) chief Arijit Basu said on Wednesday. Even before the Covid-19 outbreak, banks have begun to move into lending from the small, medium, and micro enterprises (MSMEs) and digital lending to individuals. The epidemic has accelerated the practice, Basu said, speaking at an ET BFSI event.
At each stage of the loan, some progress will be made, Basu said. For example, in an MSME loan, the cash flow budget will be in the middle stage. In stores, digital borrowing will be the norm. In agricultural lending too, many banks are taking the help of technological development to understand the needs of farmers and how they can better connect with the market.
Vyas also noted that the turnaround time (TAT) for lending needs to be reduced and stressed that it is important to move away from the lending process. According to Vyas, Artificial Intelligence, algorithm, forecasting analysis is the future of bank lending procedures to be followed.
Commenting on the exposure of banks to the financial sector through Non-Banking Financial Companies (NBFCs), DMD, Commercial Credit Group-II (North & South), State Bank of IndiaThekepat Keshav Kumar said it was wrong to say that banks were lending to NBFCs again. indirectly in real estate companies as very few NBFCs have poles in the real estate sector. PHDCCI President Sanjay Aggarwal said those who are eligible and most in need of money need to be given loans even though checks and balances can be put on hold.
It is important to develop businesses, he said.