NBFC

What Functions Does a DSA of NBFC Play?

This blog focuses on understanding the role of the DSA of NBFC. When an individual applies for a loan from a bank or NBFC^[1]to start or upscale the business, a person who helps and facilitates the service of procuring a loan is known as a Direct Selling Agent or a business correspondent. DSA look for people interested in borrowing funds from the lending market.

Who is DSA?

A  Direct Selling Agent (DSA) is a professional working as a referral agent for Banks or Non- Banking Financial Companies (NBFC). The DSA of NBFC helps find a potential client/borrower for NBFCs that they represent. The generated lead of potential clients is forwarded to the NBFCs to initiate the process of lending and further relevant activities.

In earlier days, these direct selling agents were called business correspondents or door-to-door agents who were involved in selling different financial products like home loans, automobile loans, personal loans, etc. They are independent agents that build a network of correspondents for sales and work directly with local clients. A written DSA Agreement is signed between an NBFC and a Direct Selling Agent (DSA of NBFC) to sell the services of Non-Banking Financial Companies.

Role and Functions of DSA of NBFC

The role and functions of the Direct Selling Agent are discussed below:

Handle Loan Documents

A DSA of NBFC is involved in collecting and maintaining the loan application forms and other necessary documents of the borrower. A DSA must submit the received loan documents to the management of a non-banking financial institute. All business related communications made to either client or lending institute must follow the prescribed format.

Verification

A DSA shall conduct a process of verification and due diligence to ensure the genuineness of the application for loan and documents provided by the client. Different standard checks must be performed to see if any documents have been falsified or forged.

Tele-calling

When a prospective client desires to take a product/service from the NBFC or bank, a DSA shall establish tele-communication with that client to collect the details and guide them to avail the lending facility of an NBFC. There are instances when clients are referred by the relationship manager or any other existing client. A DSA can connect to existing clients of the financial institutes as well if they have agreed to receive information about the other products of an NBFC.

The proper telemarketing etiquette shall be followed by the DSA such as calls shall be made between the standard working hours, introduce yourself and NBFC/Bank you are representing to the client, seek permission to proceed with the call, state reasons why you are calling them, reconfirms the next appointment for the call etc.

Guide the Borrower

The main role of the DSA of NBFC is to find potential clients looking for loan requirements.After finding a potential borrower, a direct selling agent must guide the clients with features of the financial products/services related to terms of the loans, lending rates, documents required, and various offers provided by the lending institutes, making it easy for the borrower to take the final decision about availing the services from the NBFC.

DSA Code

They provide their DSA Code to the borrower and financial institutes so that the application can be traced when required.

Avoid Misrepresentation

The DSA of NBFC shall not present any misinformation about the financial products/services of an NBFC. The DSA shall not falsely represent themselves as an employee of the lending institute and shall not make fake promises on behalf of non-banking financial companies.

Gifts

A DSA shall not accept any gift or bribe offered by prospective clients to finalise the sale of a product or service. If gifts are received, DSA must inform the same and get approval from the management of the financial institutes.

KYC/ AML

A DSA shall comply with the laws and regulations (KYC norms and Anti Money Laundering) to prevent money laundering activities, terrorism financing and other potential frauds. NBFCs have to protect their reputation at all times. If NBFCs or banks are found to be a part of financial crime, it can damage the image of the financial institution and can be penalised by the government, which imposes heavy fines. Therefore, compliance with the laws is taken with utmost consideration and sincerity.

A DSA of NBFC shall attend all training and awareness programmes organised and must report all suspicious activities to the management of the financial institute.

Benefits of Direct Selling Agent

The following benefits of DSA of NBFC are the following:

To Individuals

• DSA can identify potential clients;
• DSA has flexible working hours and is self-employed;
• An additional income is earned in the form of agent commission.
• No specific degree or skill set is required for performing the DSA activities.

To Clients

• Helps customise the loan products;
• Presents different kinds of loan products/services offered by NBFCs to prospective clients;
• DSA streamlines the process of availing loans;
• Monitoring queries of clients and ensuring timely resolution of issues;
• DSA of NBFC also offers assistance even after the sale of the product.

To NBFCs

• DSA performs initial due- diligence and registration of the clients;
• Prepares a list of the clients interested in availing of the services;
• Ensures optimum utilisation of NBFC resources and different tools;
• Aims to improve the awareness and market of different financial products of NBFC.

Conclusion

DSAs are instrumental in representing lending institutions and generating business opportunities in the lending ecosystem. A DSA helps banks/non-banking financial companies find suitable clients and vice versa. DSAs are provided with commissions to assist borrowers during their loan application journey with the Banks/NBFCs.

Read our Article: All you need to know about NBFC DSA Registration