How can NBFC Software Manage a Loan Portfolio with IT?

Narendra Kumar

04 Jan, 2021

NBFC is basically a financial institution carrying out finance activities/business as per the guidelines of the RBI. The loan NBFCs generally carry on the activities of loaning like business loans, working capital loan, credit to the micro, small and medium enterprises (MSMEs), vehicles loans, loan against shares/securities, personal loans and loan against gold jewelry, etc. It is observed that over the last decade, the NBFC sector has been growing very fast. They have achieved a great success story by their contributions to the economic growth of the country. The traditional NBFCs are those NBFCs which carry on their activities without any assistance or very little assistance and the help of information and technology (IT) system or digital tools as such. They operate on a manual basis with very little help of advanced IT devices. They lack usage of NBFC software.

Why Adopt Software for NBFC Business?

With the progression of technology from server to cloud, desktop to mobile and DOS to Google Android a very big distance has occurred. Many of the NBFCs are still continuing with redundant and outdated hardware and software systems like Loan Management & Loan origination systems that ignore to focus and process information that is very vital today.

It is utmost truth that each NBFC needs the data and its own interpretation for business purposes. It is observed that those NBFCs that use data to its advantages are more efficient and profitable than those who depend upon incompetent systems for data information.

• The RBI is the ultimate regulator for such NBFCs also expects it’s regulated to be techno-savvy and avail all the help and assistance of information and technology sector (IT) for NBFC business. 
• For this, the RBI^[1] has also issued the guidelines on the ‘Information Technology Construction for the NBFC sector’ on June 08, 2017. This not only guides the NBFC s but also motivates to adopt the IT systems to boost and grow the NBFC business in recent times.  
• With the best expert available with IT readiness, all NBFCs should undertake comprehensive research of the current software program adopted and become ready for the future. 
• The IT system and its suitable software are very essential in the current time.  Similarly, NBFCs also are no exception to this.  They also must adopt suitable software for their working and operations.

Thus, it is the proper time for NBFC to create a safer, secured and smarter system not only to control the dangers but also overcome such dangers smartly.

What Aspects Should NBFC Software Cover?

NBFC must adopt the right and required the type of software program to undertake its NBFC activities. It must cover the various aspects of NBFC activities and other things like

• NBFC management system
• Loan and lending management system
• Calculation of equated monthly installments (EMI) from the borrower
• Calculation of late fee/penalty etc. on loan account
• Information about the due installments and interest charge on loan account
• Details about loan repayments
• Generating monthly statement (reports) of each loan account etc.  
• Generating the detailed report for MIS for Board of NBFC etc. for policy formation

Further, it is also very much needed that data must be moved and stored with extreme powerful DB management tools. To get access to the data with multiple firewalls there are various Data Centres like AWS, MS Azure or other cloud data enters to help the NBFCs to take their advantages.

Currently, we have a variety of Loan Software Systems(LSS), the ideal software must have a few characteristics in common. A good Loan MIS will help an NBFC like the following:

How does an NBFC Software help a Company?

1. It will be paperless and it must have all the data in digital form. Thus it avoids unnecessary paperwork and reduces the time in loan processing and sanctions the loan very easily. 
2. Different level of employees having different grade and designation in NBFC organization can have access to the software and operate on it. This further helps to track the data effectively and further allotting the job to the right employee for execution purpose. Thus it is made very easy by such software.
3. Some LSS is having many advanced features that they are in a position to detect quickly any type of fraud or fake documents submitted by the borrower. Thus it can be said that they are much advanced compared to human brains.
4. The E-KYC of customers can be undertaken fully electronically. This will help to reduce time and expenses involved and further application—processing can be done faster.
5. Since the data is centrally collected on cloud storage facilitating safe, secure and reliable availability to all the necessary information. This controls the data utilization.
6. Due to the use of the technology (software) many functions like loan collections sending out auto-messages to the borrowers for repayment, knowing the details of the repayments and further issue auto-generated receipts for repayment and issue other reports like this to the borrowers. This is done automatically so it is very fast. 
7. By making use of such software it is very easy to track defaulters in the loan. The necessary actions against such defaulters can be taken very quickly.
8. This helps in obtaining a real-time update to NBFC and delivers updates as and when they occur.
9. It is very necessary for any NBFC to know about its financial position and other related data. They may include information related to income and expenditure, interest position (charged/paid) loan outstanding positions of the borrowers, etc. This type of accounting information can be obtained very quickly by NBFC by this software.
10. This is a very good instrument to obtain an effective early warning system in respect of delinquencies observed in the case of the borrowers. It is continuously monitoring the loan account and issues early and timely warnings for NPA accounts.
11. As it is a completely online system, NBFC can be available 24×7 to its clients. This helps to grow the business faster.
12. It minimizes the overall time in processing the loan application received from a borrower.
13. It also helps to monitor the activities of the marketing team of NBFC.

Non-Banking Financial Companies (NBFCs) play a vital role in the socio-economic development of any nation by promoting the habit and virtue of Financial Inclusion.

This is nothing but bringing under the financial network the individuals and persons who are not currently having any banking habits. NBFC Software is to administer all loan-related actions for Non-banking financial companies. Now a day they have become an integral part of the financial institutions in developing countries.

NBFCs’ must thoroughly understand their customer’s profile and credit for their products to fit the requirements of their prospective clients and thus stay ahead in such cutthroat competition in business.

Here the advanced technology of NBFC software will be of great help to the NBFC. The existing traditional models of NBFC would never be able to address the rising demands in the sector as it is very difficult to operate manually.

What Software Systems are Available in the Market for NBFC?

There are many good companies offering various types of software to NBFC as per its demands and requirements. They are as follow:

• Reputed software company M/s Habile Technologies from Chennai is also in the line of supplying loan software popularly known as loan management software solution or called NBFC software. This has crafted a unique product known as FINALE. This is robust and intuitive NBFC software which speeds up overall loan management process. This also provides transparency to the loan process.  This is comprehensive, integrated and modular NBFC software which help to identify its operational risks and reduce manual intervention in processing.

This solution is cloud-based and it is tailor-made NBFC software solution

Which is scalable, cost-effective and easy to operate as it is flexible in nature. Further, it is user-friendly in nature so that NBFC, as well as a borrower, are comfortable with the generation of reports through it.

This software program offers a host of benefits and advantages to the NBFC for all its needs.

• Reputed and reliable NBFC software is offered by M/s Kireeti Soft Technologies Ltd. This is a Telangana based software company having crafted a very useful NBFC software solution called FINSOFT. 

• FINSOFT is a Web-based ERP Application a new generation software solution offering various advantages like great flexibility in operation, transparency, complete control, and yet very easy to use by an NBFC for its day to day activities. Since it uses the latest technology, offering benefits like a provision for direct interaction to the borrowers /customers, the facility of online collections, SMS integration and mobile connectivity with the borrower.

• Kensoft Enterprise Fin-Tech Solution is another company in the line of supplying the software solutions for NBFC.

• Kingsoft’s cloud-ready software system helps NBFC to become more productive, serve its customers with the best innovative modern practices, and give all users on-demand access to role-based modules to decide the better loan product. It supports all the processes starting from receipt of the application to decision making on loan application, disbursal of loan, servicing and collection of loans. This tool provides great operational efficiency which enables NBFC to efficiently manage a high volume lending business.

• Another software business solution company called Nelito Systems offers software called Fincraft which is also substantially useful to the NBFC for its loaning business. This helps NBFC to undertake all the activities with such a software system.

Such loan software is a complete solution to operate the loans at various stages like loan origination, sanctioning of loan, disbursing, servicing the interest and collection of loan and reporting of such loan accounts to higher-ups in the hierarchy. This loan software is formulated in such a way that it enables NFC to receive all necessary documentation effectively from any device and from any location. Such Loan software helps loan sanctioning and other related functions to execute quickly and perfectly. Each software has its unique features helping NBFC in a different way.

Conclusion