Functions performed by DSA of NBFC

DSA of NBFC
Snehita Shukla
| Updated: Nov 08, 2022 | Category: NBFC

A DSA or Direct Seller Agent represents the NBFC to the customers and provides them with information about schemes and loan advancements. A DSA of NBFC also helps the customers with the pre and post-sale services to help maintain the goodwill and reputation of NBFCs. The DSA makes it easy for customers to obtain loans or advances from an NBFC without manipulating or extra costs.

What is a DSA?

A DSA refers to a Direct Selling Agent appointed by a bank or an NBFC for their representation. The objective is to find potential customers or to look for other banking facilities such as loan requirements or account openings. A DSA finds potential customers and guides them with banking products and procedures. The main objective of a DSA is to connect borrowers with lenders. They take responsibility for all the financial documentation and eligibility of the loan application process in a bank or NBFC. They ensure that the paperwork process is followed in order and help verify the banks’ due diligence.

A DSA of NBFC or Bank offers services to the borrower and lender and is eventually paid by NBFC or Bank in return. The payment received by the DSA of NFBC or bank is a percentage of the loan amount sanctioned to the customer.

What is NFBC?

NBFC or a Non-banking financial company is a company registered under the companies act 1956[1]. It operates in the business of advances and loans, acquiring shares, bonds, stocks, securities or debentures that a local authority or the government issues. NBFC has a principal business in receiving deposits in instalments or lump sums under any arrangement or scheme. NBFC or Non-banking financial company has no license issued by RBI, but they are still eligible to provide various banking services. However, NBFC cannot accept public demand deposits such as saving accounts, fixed deposits, etc. NBFC’s majorly work in activities related to loans and advances.

Eligibility for DSA of NBFC

To be eligible for a DSA, a person must meet some essential requirements, such as –

  • They must have attained eighteen years of age and be a Citizen of India.
  • They must be able to work in public dealing.
  • They must have a good knowledge of financial products and services
  • They must have good communication and persuasive skills

Functions of DSA of NBFC

DSA is responsible for performing various functions, some of which are listed below-

Handling and Maintaining loan documents:

The DSA of NFBC is accountable for handling and maintain the loan application forms and other documents from the borrower.

Verification and Due Diligence of documents:

The DSA of NBFC is required to conduct due diligence and verification of loan applications and required documents. The DSA must also ensure that the documents are genuine and authentic and must submit all the documents and forms to NBFCs.

Communication with the customer:

If a client is willing to take a service from the NBFC or bank, the DSA or NBFC Bank must communicate with the customer from time to time and guide them with all the required details, documentation and procedure. The DSA must follow proper telemarketing etiquette, and calls must be made during standard working hours; a formal introduction must be given at the beginning of the call, consent for the next appointment must be taken, etc.

Customer Guidance:

One of the main functions of the DSA of NBFC is to guide the customers with all the details related to the financial services provided to them. The DSA must also inform the customer about any offers supplied by the lending institutes or any detailed information to make it easy for the customer to avail of NBFC services.

DSA Code:

The DSA of NBFC provides a DSA code to the person or financial institutes so that the application can be traced when required.

No false presentation:

The DSA of NBFC must ensure that they do not provide any misinformation regarding the lending services or financial products of NBFC. There must be no false presentation by the DSA regarding any information or promises on behalf of the NBFC.

No Gifts or Bribes:

The DSA of NBFC shall not accept any bribe or gift offered by the client to finalise the sale or service. If any gift is received, the DSA must get approval from the NBFC management.

Anti-Money Laundering compliance:

The DSA of NBFC must comply with the Anti-Money Laundering or KYC norms to prevent money-related fraud. Financial institutions must protect their goodwill and reputation at any cost to avoid penalties and punishments.

Benefits of having a DSA of NBFC

Benefits of having a DSA are as follows-

To the Individual:

  • The DSA are self-employed and have flexible working hours
  • The DSA loan agent commission acts as an additional income
  • It is a low-risk and low-cost business
  • There is no requirement for a specific degree or skill to do this job. The NBFCs provide training to Individuals

To the Customers:

  • The DSA helps the customer with their queries and issues with ease
  • The DSA clarifies the customer’s selecting the type of Loan or Advance
  • The DSAs also assist in the sale

To the NBFC or Banks:

  • The DSA of NBFC completes the registration and pre-verification of documents and other details of the customers
  • The DSAs also address and shortlist potential customers, making it easier for NBFCs to sort out their potential customers
  • The DSAs spread awareness about financial products and services offered by the NBFCs in public

Conclusion

The DSA of the NBFC plays a vital role in representing the NBFC to the public. DSA plays a bridge between the customers and the NBFCs. The amount of commission generated by the DSA solely depends on the number of lending generated by them. The DSA is, however, a profitable yet low-risk and low-investment business, and it can be easy and convenient to work as a DSA.

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Snehita Shukla

Snehita has her qualifications in B.Com LLB and LLM, and holds a specialization in Corporate & Financial Laws and Policy. She is hardworking, dedicated and sincere. She has a great command in english and has great problem solving, critical thinking and writing skills which makes her stand out of the crowd. She has a keen interest in legal research work and content writing, she also has a hold in legal research methodology. She loves to take challenges and to explore new topics to research on. She aims to improve her knowledge and skills through her experience.

 

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