How Covid has transformed banking, financial services - The Daily Guardian
Connect with us

News Plus

How Covid has transformed banking, financial services

Thanks to the push for zero-contact interactions, banks and financial institutions have had to opt for digitised modes of functioning, leading to a major transformation in borrowing and lending processes.

Joydev Sengupta



The pandemic has decimated thousands of lives and livelihoods in the last few months, impacting society everywhere at a very fundamental level. The business dailies repetitively narrate stories of yet another industry failing and stories of pathos in which hundreds more struggle to feed their family with the closing of each business.

Among this gloom and despondency, every industry did what it could to survive the period. However, the banking and financial services industry, or BFSI as it is called, took it to a different level altogether. The BFSI used the pandemic as an opportunity to reinvent itself, accelerating its own evolution as a digital avatar. The execution of documents, KYC, security creation and recovery of dues — all basic processes of lending underwent a sea change because of compulsions set by the pandemic. It would be tempting to conclude that this progress was due to the entrepreneurial spirit of the BFSI sector alone, but the fact is that the scale and pace of change are also in a large measure due to the regulators and the judicial system.

As any person who has ever availed a loan from a lender will testify, the process of doing so is very paper-intensive. It was customary to sign reams of paper, application forms, agreements, declarations, etc, and then more for identification (KYC) and security creation. Paper-intensive processes obviously have their challenges, not just for the borrower, but also for the lender who has to collect, process and secure every sheet of paper signed or collected. The human capital employed to collect or manage this paperwork also adds its own cost, making the historic processes sub-optimal.

 The onset of the pandemic changed the game for lenders. Bank staff could no longer physically obtain signatures on loan agreements. Stamping and registration before the relevant authorities being in public spaces were no longer considered safe, and no employee would agree to travel all over a city only to collect documents, at a risk to themselves and their families. The announcement of the moratoriums by the Reserve Bank of India was a temporary breather for some borrowers, but routine collection activities of sending notices, following up and collecting payments from borrowers, and litigation were severely impacted as postal and courier deliveries stalled.

Against this backdrop of systemic issues nationwide, owing to the fact that stopping lending activities for the duration of the pandemic was neither feasible nor practical, digitization of the processes with all its innovations grew in scale and popularity. The first and most obvious touchpoint was the execution of loan documents where the manual intervention of a borrower signing the loan documents physically was replaced by the use of an Aadhaar-based e-signature facility introduced by the government and administered by NSDL. E-Sign is an online electronic signature service which permits an Aadhaar cardholder to sign a document after his or her Biometrics/One Time Password authentication is carried out, thus requiring no paper-based application forms or documents. Lenders have started using this e-signature facility instead of obtaining physical signatures on loan documents to provide loans to borrowers in need during the pandemic, providing muchneeded succour to them.

At the heart of any financial transaction is a process called KYC, or to use its full form, Know Your Customer. As the name itself suggests, every banker and lender needs to “know” their customer before offering products and services to them. The process is not one where someone merely collects the identification documents of a customer, but one where they crosscheck and verify every bit of the data and documentation they obtain from a customer, including the place of business, residence, etc. This is often a tedious activity inasmuch as it calls for multiple visits to collect the papers, seeking attestations, clarifications and additional paperwork to really get to know the customer, and complete the statutory requirements. In a series of moves predating the pandemic, the Reserve Bank of India had, in tandem with the government, sought to create repositories of borrowers’ data through CKYC and information utilities. In effect, a borrower’s details recorded across the entire network of banks and financial institutions was sought to be securely stored and used as per the borrower’s explicit consent for the borrower’s needs using CKYC. The information utilities, on the other hand, seek to track loans of all kinds so that lenders make an informed choice before offering and loading customers with financial liabilities, which they could ill afford. To these far-reaching initiatives, the Reserve Bank added video KYC, a process that would allow the verification of the antecedents of a customer over a live video feed, thus reducing the regulatory burden on both the customer and also the banks and institutions. As on date, banking majors such as ICICI and Kotak have already launched their video KYC offerings, with press reports suggesting that HDFC Bank is expected to do so soon too and count itself among the early adopters.

Many people will remember that in the not too distant past, procuring stamp paper for documents, be it for availing loans or even making a simple affidavit, would be an onerous task. Horror stories about stamp vendors would abound, overcharging was rife, and the availability of the required denominations was always a challenge. The fact that we do not face such issues today is a tribute to the governments of the day, both central and state, making changes in the law allowing franking, and also creating infrastructure where people of certain states can pay stamp duty from the comfort of their homes and print out the stamp paper certificate. In Maharashtra, one can simply obtain a challan by paying the stamp duty and affixing it to the document. Initiatives of this kind have a huge impact in terms of convenience and cost for people, more so when a person is seeking to avail a loan during the pandemic. The borrower and even the lender is no longer dependent on a stamp vendor to deliver the requisite quantity of stamp paper, and financial assistance is not held up on this count.

 This is not all, of course. As far back as 2013, the government of Maharashtra took a landmark step when it enacted the Maharashtra e-Registration and e-Filing Rules 2013, permitting online registration of documents using a special module developed by the office of the Inspector General of Registration. Anyone who has ever purchased property or gotten any document registered would remember the serpentine queues at the registration offices all over the country, often located inconveniently, and requiring one to take off from work. The 2013 Rules provide a credible alternative as they allow people to register their documents online. Imagine the difference this step alone would make to the housing finance industry where people who want to complete the formalities for loans required urgently for their dream home but have been justifiably wary of approaching an office during a pandemic where hundreds of people come for their work. Registrations of leases for properties on rent, new purchases of land and residential property would no longer be dependent on when the office opens for business but can be done safely and securely without endangering the parties. For every lender seeking to create security on newly purchased property, transaction execution would be so much simpler, safer and efficient.

It is fairly well known by now that the banking and financial services industry is expecting a significant amount of defaults and non-performing assets in the months to come. Communication with borrowers, including following up to collect past dues and initiate legal action, was impacted when the lockdowns began. The unavailability of postal and courier services meant that notices requiring a defaulter to either pay on time or to respond to a demand made or take cognisance of a court hearing could not be delivered physically. A common problem which occurs even when there is no pandemic is that defaulting borrowers often change their residence and disappear without a forwarding address with the intention of avoiding their creditors. The fact that not just recovery activity was carried out, but various notices and documents related to court proceedings were also delivered to their recipients, was actually due to a series of measures initiated by the Supreme Court of India and implemented by the High Courts and the rest of the judiciary. While the use of email for sending out notices was mandated by the Supreme Court long before the pandemic arrived, the use of instant messaging services such as WhatsApp was formally blessed by the highest court in the country and immediately put into practice in July 2020.

The aftermath of the pandemic will probably be felt in the immediate future as well. The only saving grace seems to be that human ingenuity and innovations like the e-sign, the changes in stamping, registration and use of technology in communicating with borrowers look like they are here to stay.

Joydev Sengupta is a practising lawyer, specialising in laws relating to supply chain financing, digital lending and payment systems. The views expressed are personal.

The Daily Guardian is now on Telegram. Click here to join our channel (@thedailyguardian) and stay updated with the latest headlines.

For the latest news Download The Daily Guardian App.


Typhoon Talas smashes Japan, leaving thousands without water, electricity, two killed




Thousands of people in central Japan were without running water and electricity on Sunday after Typhoon Talas dumped record rainfall on the area, causing floods and landslides and leaving at least two people dead.

According to the AFP’s published report, the body of a man in Kakegawa city, Shizuoka region, was pulled from what remained of his house on Saturday after a landslide destroyed it.

“Another male (in neighbouring Fukuroi city) was driving to his home (Saturday) when the water level rose and his vehicle apparently stopped. While the individual tried to walk home, he was believed to have died,” a regional disaster management official said.

He stated that another man was still unaccounted for in Kawanehoncho town, Shizuoka, after his car slid into a gap that appeared in the road. He also mentioned that three other people received minor wounds.

According to the Japan Meteorological Agency, Typhoon Talas battered central Japan on Friday and Saturday as it passed by close off the Pacific coast, pouring more than 40 centimetres (16 inches) of rain in Shizuoka villages in a single day.

Before heading back out to the Pacific on Saturday morning, it was downgraded to a depression.

Up to 120,000 homes may have lost power on Saturday as a result of the storm’s heavy rains causing landslides, including in the isolated mountains of Shizuoka. This is because several electricity pylons fell and broke as a result.

According to the local firm Chubu Electric Power, 2,910 homes in Shizuoka and the neighbouring Gifu region were still without electricity as of Sunday afternoon.

“As for those areas where restoration crews are not able to reach due to blocked roads after landslides, we will make progress while analysing the conditions of the landslides,” the utility said.

Debris choked a water inlet in Shizuoka, leaving almost 55,000 homes without running water.

“Currently, we are working to remove debris from a water inlet. But for now we are unable to give any estimate as to when it can be restored,” the regional government said in a statement Sunday morning.

Typhoons regularly cause significant damage to Japan in the summer and fall.

Typhoon Nanmadol struck southwestern Japan this weekend, leaving 147 people injured and four dead.

Continue Reading


Top opposition leaders gather at INLD rally to challenge ‘Delhi Sultanate’




Sharad Pawar, the head of the NCP, Nitish Kumar, the chief minister of Bihar, Sitaram Yechury, and Sukhbir Singh Badal, the leader of the Shiromani Akali Dal, were among the prominent opposition figures that attended the INLD’s large gathering on Sunday in Fatehabad, Haryana.

JDU leader KC Tyagi addressed the crowd and claimed that the Bihar CM has come from Patna to challenge the Delhi Sultanate at a time when eight former Congress CMs had switched to the BJP. He claimed that Kumar has no fear of the ED, the income tax, or any other organisations.

To commemorate the birth anniversary of Devi Lal, the founder of the INLD and a former deputy prime minister, a rally is being conducted.

Tejashwi Yadav, the deputy chief minister of Bihar and the head of the RJD, as well as Arvind Sawant of the Shiv Sena, also showed up at the gathering to demonstrate the unity of the opposition.

The coming together of so many regional satraps is seen as part of efforts to forge opposition unity. Kumar and RJD president Lalu Prasad are likely to meet Congress president Sonia Gandhi after the rally to take the process forward.

Veteran socialist leader Tyagi had already declared that the gathering would be historic because it would unite like-minded forces against the BJP in the run-up to the 2024 Lok Sabha elections.

Continue Reading


‘Resort bulldozed to erase evidence?’: U’khand girl’s family




The family of Ankita Bhandari, a 19-year-old Uttarakhand receptionist, refused to cremate her body on Sunday, questioning the postmortem report and the government’s overnight action of bulldozing portions of the resort owned by the prime suspect, Pulkit Arya, the son of now-expelled BJP leader Vinod Arya. They claimed that this may have destroyed the evidence at the crime scene.

Ankita Bhandari allegedly rejected attempts by Pulkit Arya and two others to force her into prostitution, and as a result, she was killed. The woman’s body,  who was reported missing on September 18, was found in Rishikesh’s Chilla canal on Saturday.

Her brother Ajay Singh Bhandari questioned the resort’s bulldozer activity, speculating that it might be an attempt to destroy evidence.

In the late evening on Friday in Pauri Garhwal, the district administration used a bulldozer to demolish the suspected unlawful construction of the Vanantara resort in Ganga Bhogpur Talla. The building was later set on fire and had its glass windows broken by a group of angry local residents on Saturday.

“I am not satisfied with the provisional postmortem report. Her last rites will not be performed until we get the final detailed report,” said Ankita’s father Virendra Singh Bhandari.

The woman’s funeral was slated to take place on Sunday morning. At the Srinagar Medical College, her body is on display. The family has also urged that the accused be given a speedy trial and executed.

According to the preliminary autopsy report, she had suffered blunt force injuries and drowned to death. Ante-mortem injuries were found on the body, according to the autopsy, which was performed by a team of four doctors from the department of forensic medicine and toxicology at the All India Institute of Medical Sciences (AIIMS) Rishikesh.

“We are making efforts to persuade the family. They have some concerns about the post-mortem report. We are taking every step possible to support the family. However, some things like post-mortem are beyond our control,” said Pauri additional superintendent of police (ASP), Shekhar Chandra Suyal.

According to officials, the final post-mortem report is expected to be released on Monday.

The government’s bulldozer action to destroy the resort has also drawn criticism from the state unit of the Congress party.

Is the government destroying the evidence by ordering the bulldozer action at the resort? Police failed to secure the custody of the accused. The Dhami government’s intention is not pure,” said party’s state chief, Karan Mahara

Continue Reading

Auto & Tech

Instagram to develop safety tool to protect users from filthy DMs




Instagram is developing a new security feature that will shield users against sexually inappropriate photographs in their inboxes. According to The Verge, the “Nudity Protection” tool will work to weed out instances of online harassment known as “cyberflashing.”

Recent days have seen a significant rise in cyber-flashing incidents, which entail sending unwanted sexual messages to strangers, frequently women. By empowering users to automatically reject direct message requests containing objectionable content, this new functionality aims to combat this threat.

The report says Meta is going to use machine learning to support people to shield themselves from nude photos and other undesirable messages.

Alessandro Pauzzi, a Meta developer, also shared a sneak peek of the new feature on Twitter.

In a tweet, he shared the screenshot of the possible feature and wrote, “Instagram is working on nudity protection for chats. This technology covers photos that may contain nudity in chats. Instagram CAN’T access photos.”

Confirming this, a Meta spokesperson told The Verge they are working closely with experts to assure these new features maintain people’s privacy while also providing them to control over the communication they receive. The technology won’t let Meta view the actual messages or share them with third parties, the spokesperson mentioned.

When the feature is released, Meta said, users will have the option to enable or disable it at their choice. The feature is currently in the development phase.

A control system for parents of minors using the social networking site owned by Meta in India was recently developed. This function is now considered to be the next development in ensuring users’ privacy and security.

In addition to the current Hidden Words function, which was first launched in 2021, this feature will be available. Users can automatically filter problematic words, phrases, and emoticons into a protected folder using the Hidden Words function. Even DM inquiries that are presumably spammed are filtered out by this tool.

Continue Reading

Auto & Tech

Prime Minister Modi to inaugurate 5G services on October 1





The 5G services will be launched by the Prime Minister Narendra Modi on October 1 at the India Mobile Congress.

In October, the Prime Minister will open a four-day conference where top telecom providers including Reliance Jio, Bharti Airtel, and Vodafone Idea will outline their 5G plans for the nation.

According to a source with knowledge of the situation, “the 5G services will launch in India at the India Mobile Congress on October 1.”

The department of telecommunications (DoT) and the cellular operators association of India jointly organise the India Mobile Congress (IMC), one of the major telecom, media, and technology events in Asia (COAI).

This news comes about a month after Reliance Industries Ltd. announced it would invest 2 lakh crore to build out its 5G services in important cities including Delhi, Mumbai, Chennai, and Kolkata by Diwali and throughout India by December next year.

The Reliance Jio intends to launch Jio 5G by this Diwali 2022 in a number of significant locations, including the megacities of Delhi, Mumbai, Kolkata, and Chennai.

Within the next two months, by Diwali, we will launch Jio 5G across multiple key cities, including the metropolises of Delhi, Mumbai, Kolkata, and Chennai. By December 2023, which is less than 18 months from today, we will deliver Jio 5G to every town, every taluka, and every tehsil of our country,” Ambani told shareholders at the company’s annual general meeting on August 29.

By March 2024, Bharti Airtel, a competitor of Reliance, intends to roll out its 5G services in 5,000 cities and towns.

“By December, we should have coverage in key metros. After that, we will expand rapidly to cover the entire country,” Gopal Vittal, the chief executive officer of the second largest telecom operator, said earlier this month.

Even though Vodafone Idea purchased spectrum in 17 circles across the nation during the auction month, it has not yet made any announcements regarding its plans for 5G services.

The government’s airwave auction saw Ambani’s Reliance Jio Infocomm Ltd emerge as the biggest buyer, spending 88,078 crore, more than twice as much as Bharti Airtel Ltd, which came in second.

By selling 51,236MHz of spectrum at the week-long auction, Ambani’s acquisitions assisted the government in earning a record-breaking 1.5 lakh crore. Wireless operators purchased 71% of the available airwaves in the 72,098MHz band, including 5G spectrum, with the sale of spectrum in the 3.3GHz band generating the highest revenue of 80,590 crore. A total of 39,270 crore, 14,709 crore, and 10,376 crore were generated from the sale of airwaves in the 700MHz, 26GHz, and 1,800MHz bands, respectively.

“We understand that the spectrum purchased is good enough for covering the entire country. So, there’s good reason to believe that in the coming two to three years, we’ll have very good coverage of 5G in the entire country,” telecom minister Ashwini Vaishnaw had said after the auction.

Continue Reading


SIT chief on Uttarakhand girl murder: Every resort staff called for investigation




The chief of the special investigation team (SIT) has stated that they have called up every employee of the resort where the 19-year-old was employed as a receptionist to the police station as part of the investigation into the murder of the young woman in Uttarakhand, which has sparked intense public outrage.

DIG PR Devi said that they are taking everyone’s statements and running a full background analysis on the resort.

The body of the minor, who was allegedly killed by Pulkit Arya, the son of expelled BJP leader Vinod Arya, and two employees of a resort he owned in Rishikesh, was found in the Chilla Canal on Saturday.

According to the preliminary autopsy report, the victim died from drowning and had suffered blunt force trauma. Antemortem injuries found on the body were also included in the report. The girl was being pressured to enter prostitution, according to the police. WhatsApp conversations that support the claim are in the possession of the police.

According to reports, the woman told some of her friends and coworkers about those chats, which incensed the accused. According to the authorities, during the confrontation that took place on Monday night between the three accused and the woman regarding the matter, the accused hurled the latter into the Chilla Canal. In an apparent attempt to deceive the authorities, Pulkit Arya filed a missing person’s report after that. The three suspects have been arrested by police amid considerable outrage over the suspected murder.

Meanwhile, the BJP removed Vinod Arya and the accused’s brother, Ankit Arya, from the party on Saturday with immediate effect.

Continue Reading