HDFC Bank to sell loans to non-customers through ATMs

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What : ATM network to grab new customers
Who : HDFC Bank
When : Feb 01,2016

HDFC Bank, which has emerged as the most valuable lender on the back of its strong retail book, is now throwing its weight behind automated loan processing to consolidate its position in the personal loans segment. The bank is now using its ATM network to grab new customers, including those of other banks who happen to use

The strategy follows a recent dispensation where the RBI allowed banks to extend all branch service via ATMs. HDFC Bank’s analytics and credit scoring engine has already been engaged in automating the credit appraisal and disbursement process for its own customers. Close to 15% of its new personal loans are now sanctioned and disbursed by the bank’s computer systems online without any human intervention.

From next week, the bank is moving this platform to its 11,000-strong ATM network. Those who pass muster with the bank’s credit-appraising software will see an ‘insta loan’ button on their ATM screens. These will be largely those with salary accounts or customers who have been transacting with the bank for several years. All others (including other bank customers) will have a ‘click to call’ button. “We have run a pilot on this and found that half the customers choose this option outside banking hours and over 20% have clicked between 5am to 9am,” said Arvind Kapil, senior executive VP in charge of unsecured loans at HDFC Bank. According to Kapil, the disbursement through ATMs is a game changer for the bank as ATMs are open round the clock and available at more than double the locations as branches (4,281). The ‘click to call’ option enables the bank to work around the ‘do not disturb’ customers and the applicant can choose any number for a call-back.

In the second phase, customers will be able to instantly top up existing loans on ATMs and obtain a credit card. The bank expects to convert a large chunk of its eligible customers among three crore-plus account holders into credit card holders. Although a large number of customers qualify for a credit card, the RBI guidelines do not allow the bank to issue unsolicited cards.

HDFC Bank is clear mar-ket leader in personal loans. Excluding home loans, HDFC Bank’s share of personal lo-ans comes to 30% of all banks together. With home loans, the share drops to 16.4%. Altho-ugh personal loans, at 18.5% of gross bank credit, is a smaller portion of bank loans compa-red to loans to industry, it is the fastest growing segment to-day. According to RBI data, bank credit as of end Decem-ber grew 9.2% while personal loans for banks grew 16.1%.