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No more agents to chase you for loans!
Banks will have to change the way they chase you for loans
The Reserve Bank of India (RBI) has banned the use of direct selling agents (DSAs) to source retail loans and carry out physical verification of documents of borrowers.
This was communicated by the central bank in a response to queries raised by the banking industry, two senior bankers told ET.
Who are these agents?
The mechanism, institutionalised for more than a decade, has contributed to the surge in banks’ retail loan books.
Why a ban on DSAs?
“RBI believes that agents should play a limited role. And KYC procedures, involving verifying borrowers’ original documents should be performed by bank officials and cannot be outsourced... The regulator may have come across instances of misuse,” said another banker.
A lurking fear
“This was a lurking fear ever since the new anti-money laundering norms were issued. But now, thanks to the new rules, RBI has put it down unambiguously,” said the compliance-head of a large bank.
Agents hired by banks and business correspondent (or facilitators) may carry out eKYC of borrowers or physically carry a biometric reader to a customer’s residence for identity verification. But bankers believe that equipping lakhs of DSAs with readers and connectivity cannot happen overnight.
New rules, old blues
However, this is disallowed by the new prevention of money laundering rules which, as part of relaxation, allows ‘deemed OVDs’ as address proof. Deemed OVDs are restricted to utility bills not more than 2-month old, municipal tax receipt, letter of accommodation by central or state departments, regulated or statutory bodies, scheduled banks and listed companies.