Personal loans is one of the most sought-after loans in India. People take personal loans for various reasons like wedding, home renovation, festive related expenses or to clear existing debts. However, personal loans falls under the unsecured loans category. This requires stringent document verification process. Verification process widely differs from bank to bank. The process of personal loan from the bank's perspective is as follows:
This is the first stage of the verification process. The bank needs a loan application to initiate the document collection and verification process. A borrower can directly visit a bank to fill up the loan application form or do it online.
Once the bank receives an online or offline loan application, they usually send a bank representative to the borrower to collect the mandatory documents required to avail a personal loan. Most banks require address proof, identity proof, income proof documents, stamp size photographs and a duly filled loan application process to process a personal loan.
The bank takes 1 or 2 days to analyse the documents provided and forwards it to the verification department. Generally, banks have their in-house verification team who sends representatives to the borrower's place of residence and verifies the address in person. They also visit the borrower’s workplace and verify if the customer works with them. Verification of other documents like PAN Card, Aadhaar or Passport is done online using various portals. After verifying all the details furnished by the borrower, the verification team forwards their findings to the personal loan officer who handles that particular account. If the verification result is positive, the bank processes the loan or else the personal loan application gets declined during this stage. The bank will clearly communicate the reason for disapproval of the loan to the borrower which allows them to correct the issue from their end.
One may call this as the last stage of the personal loan process. As the personal loan officer has a positive remark from the verification team, they go ahead and draft the loan agreement. A loan agreement will have all the information a borrower needs to know before signing for a personal loan. It will include the total loan amount, the interest rate and type, the tenure of the loan, charges if any, terms and conditions, and other important information about the loan. Once the customer reads and signs the loan agreement sent by the bank, the personal loan amount is credited within 24 hours to the borrower's bank account.
If you are planning on applying for a personal loan this festive season, go ahead and have all your documents ready. This will expertise the loan verification process.