Banks will focus on cash flow based lending in the future: Ajay Vyas from UCO Bank

According to Vyas, artificial intelligence, algorithms, predictive analytics are the future of lending standards for banks to follow.

Passing credit rating criteria for lending, banks are likely to focus on cash flow-based lending in the times to come, a senior executive at UCO Bank said.

“Banks will focus on cash flow based lending in the times to come and this has already been started by SBI”Said Ajay Vyas, Executive Director of UCO Bank during a virtual roundtable on Redefining Corporate Finance in the New Normal organized by PHD Chamber on December 23, 2020.

Various SBI officials have advocated lending models based on cash flow rather than traditional models based on assets or ratings.

In cash loans, a financial institution provides a loan that is backed by the recipient’s past and future cash flows. Vyas further noted that the turnaround time (TAT) for granting loans needs to decrease and stressed the importance of moving away from the rating criteria for granting loans.

According to Vyas, artificial intelligence, algorithms, predictive analytics are the future of lending standards for banks to follow.

Speaking on banks’ exposure to the real estate sector through non-bank financial corporations (NBFC), DMD, Commercial Credit Group-II (North and South), National Bank of India Thekepat Keshav Kumar said “it is wrong to say that banks lend to NBFCs and indirectly to real estate companies, because very few NBFCs have stakes in the real estate sector”.

PHDCCI President Sanjay Aggarwal said those who deserve and urgently need funds should be given loans, although checks and balances can be put in place more strictly.

It is important to promote business, he said.

Get Live Stock prices of ESB, NSE, American market and last net asset value, portfolio of Mutual fund, Discover the latest IPO News, The best performing IPOs, calculate your tax by Income tax calculator, know the market Best winners, Top losers & Best equity funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.


About Wilhelmina Go

Check Also

Arkansas woman charged with nearly $2 million COVID-19 relief fraud

This is an archived article and the information in the article may be out of …