Assignment 1: Submitted By: Bappa Shona Baroi (0092/50)

Case facts: The current Scenario of loan disbursement system follows the following steps:

Step 1: The Customer through a channel (Branch, DSA, Web etc.) submits the relevant documentsto a branch of IBI. (1 day)

Step 2: Executives at the branch do a round of primary verification and send the file to the CentralOperations department at Mumbai. (2 days + 2 days for each iteration)

Step 3: CO department does Secondary verification of the file. If the papers are not in order or incase of a discrepancy, the HO asks the Branch for clarifications / supplementary proofs. After thecompletion of the secondary verification, the file is sent to the Risk Management and AuditDepartment. (4 days + 3 days for each iteration)

Step 4: The Risk Management and Audit Department does a credit check, audits the documentssubmitted and checks the sanctioned loan amount. If there is a discrepancy or the loan amountexceeds the permissible credit amount for that customer, the department sends the file back to COdepartment for review. (4 days + 2 days for each iteration)

Step 5: The CO Department after approval from the Risk Management and Audit Department,sends the file to the Legal department for preparation of loan agreement papers. The legaldepartment sends the agreement papers to the originating branch which, after signature of thecustomers sends them back to the legal department. The legal department then registers the loan.(10 days)

Step 6: After a go ahead from the legal department, the CO department instructs the Head office todisburse the loan. (5 days)

Based on these, the workflow model generated is as follows:

Goals that Mr Sengupta proposed to achieve:

1) Reducing loan turnaround time. (Target - 3 days)

2) Reducing Operations cost. (Target – by 25%)

3)Integrating the operations of HBIL with its subsidiaries.

4) Increase Customer Satisfaction.

From the workflow diagram of the current loan processing system, we see there are many scopeswhere optimisation can take place. Loops are there in Secondary Verification Step. A number oftasks like primary verification and risk assessment can be run parallely, but in the current system,there are no parallel tasks. This leads to wastage of time and resources.

Considering the issues, the following workflow design is proposed:

Reducing loan turnaround time:

Complete Verifiation Process done in the Branch Office

Secondary Verification and Legal Loan Agreement run in parallel.

Credit Check, Document Check and Loan Amount Check Run in parallel

Days Saved>3. So goal Accomplished.

Reducing Operations Cost:

Secondary Verification Process can be done at the Branch office itself as the process of doing halfthe verification here and half at another place would just make the process waste resources. Also,detecting document discrepency at the Branch itself makes it much easier for the customer to solvethose issues rather than creating an information gap between the Corporate Office and the customerthrough the Branch. This can significantly reduce the Operations Cost.

Integrating the operations of HBIL with its subsidiaries:

Whether to go for integration of HBIL with its subsidiaries is a complicated decision which willdepend upon the state of those subsidiaries. If the subsidiaries are too autonomous with their ownestablished operation processes, integrating would not make much sense. But if these are not toodeveloped, then it would best serve the interest of HBIL to integrate and upgrade to a commonsystem. From the case facts, it is not very clear about their condition.

Increase Customer Satisfaction:

Customer satisfaction is directly correlated to the manner in which customer issues are tackled.Reducing the loan sanction time would automatically please the customer. Also keeping helpingdiscover the issues in documentation and verification at early stages, say at the Branch or DSA levelwould keep the situation much under the customer's control instead of a looping between theCentral office and the Branch in which case the customer just feels like a pawn. The bank can alsoimplement IT wherby the customer will get a notification email or SMS at each milestone reachedby his/her loan application.