Are Paperless Lending Options Soon Becoming a Reality? How is it beneficial?

paperless lending

The Covid-19 Pandemic has taught several lessons to society. One of the significant lessons was not to mess with nature because you can dangerously fall into the trap of Karma. Unfortunately, many people suffer the brunt of playing with nature, and some of us here are hoping and progressing towards a sustainable and environment-friendly world.

However, the banking and finance sector of the world also has taken the conservation of nature and natural resources agenda very seriously. Hence, their proposition to the above cause is Paperless Lending.

You must know that tearing or wasting a single sheet of paper equals cutting down one tree. Hence, with the advent of technology, it is high time to ditch paper and use the internet to initiate the lending processes.

So, if you ask, are paperless lending options soon becoming a reality? The answer would be a big Yes. This blog will help you understand the benefits of it in detail.

What is Paperless Lending?

Paperless Lending is a form of lending that is done entirely over the internet. It is also known as Digital Lending.

Paperless Lending is a very sustainable and reliable method of lending these days. It doesn’t require the need of physical documents. It is also effortless and quick to lend money over the internet. Hence, today most financial bodies prefer the mode of Digital Lending.

It is an excellent initiative for financial penetration in India. Any person belonging to any background and apply for paperless loans without any limitations. The complete process is taken care of over the internet, and the loan is disbursed in no time. The rise of Fintech Companies has made digital lending smoother and more accessible in India.

What are the shortcomings of the Regular Lending Process?

The Regular lending process that involves physical documents has been practiced for ages as there were not many technological advancements then. But today, with internet use growing and technology dominating every sector, it’s time for the finance and banking systems to change.

There were many shortcomings of the Regular lending Process that has made Paperless Lending a Reality these days. The drawbacks are:

  • Long and Tiring Process
  • The Physical Lending process is very lengthy and exhausting.
  • All the approvals required in this process are numerous and physical.
  • Hence, it takes a lot of time to approve and disburse loans in this process.
  • Unreliable
  • The manual process of lending deals with numerous documentation.
  • Since it’s manually managed, the chances of errors are more.
  • Hence, it is not a very reliable method of Lending.
  • Expensive
  • In the physical lending process, the requirement of a massive set of documents is mandatory.
  • The documents in physical form consume a lot of paper and stationery.
  • Hence, it is an extra expenditure for the financial institutions.
  • Risky
  • The physical documents can be easily manipulated.
  • It can also lead to improper loan disbursements.
  • People can also fool financial institutions on paper.
  • Hence, it is a risky process of Lending.
  • Harmful to the Environment
  • After the Covid-19 pandemic, awareness about nature and natural resources has increased.
  • Using so much paper is a clear sign of deforestation.
  • Even if one sector like Finance and Banking reduces the clutter of paper, so many trees are saved from being cut down.
  • Hence, the manual process of lending is harmful to the environment.

What are the benefits of Paperless Lending?

There are numerous benefits of Paperless Lending. They are:

  • Easy Loan Disbursement
  • Since the complete loan disbursement process is digital, the process is equal to the speed of 5g internet.
  • All your data can be sent digitally to disburse the loan amount in less time.
  • The approval of your loans based on your previous data is also extremely smooth and quick.
  • Fewer Chances of Fraud
  • Documents or papers can be manipulated, and since it is a manual task, there are higher chances of errors.
  • However, in paperless or digital lending, the chances of manipulation with documents are sleek.
  • Hence, the chances of any fraud on either side are negligible.
  • Highly Efficient Process
  • Since the barrier of paperwork and documents is eliminated in the Paperless Lending method, the process becomes highly efficient.
  • It reduces by around 30-40% overheads.
  • It also saves time, increasing the productivity of the financial bodies.
  • Reduced Expenditure
  • When dealing with the physical lending process, the cost of paper, storage, printing, and other expenses are very high.
  • On the contrary, the paperless lending method does not have such requirements; hence there is zero expenditure in the documents section.
  • Every financial institution can save money by not spending on paper and paper-related accessories.
  • Environment-Friendly Option
  • Without any doubt, Paperless Lending is an environmentally-friendly option.
  • When saving one paper from being used, you are saving one tree from getting cut down.
  • The initiative of Paperless or Digital Lending is a great one and is here to stay forever.

With the surge of the internet and technology, it is high time we switch to a more reliable and sustainable mode of lending, which is Paperless Lending. The digital lending process is not only environmentally friendly but also effortless and less time-consuming, unlike the traditional lending method. You can also save a lot of expenditure as you don’t have to store thousands of documents. It is also one of the most secure methods of lending that can be practiced in the future.

Paperless Lending is one way the finance and banking sector has reduced the paper clutter and is heading toward innovation. It is ideal to support them on this journey and make this reality possible.

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