The short term loan lifecycle
Every short term loan walks the same eight stages. Lenders differ in how much of the walk is automated, and how much of it is on the record.
1 · Lead
A borrower arrives — portal, website, referral or upload — and becomes a file with an owner. The stage’s real job is triage: dedupe against existing records, screen eligibility, and get the file to a human (or a policy) fast, because short term intent decays in hours, not weeks.
Control that matters: ownership. Files without a clear owner rot; round-robin assignment with leave-awareness keeps every lead on someone’s desk.
2 · KYC
Identity gets verified from source: PAN and Aadhaar from DigiLocker rather than photographed copies, a short recorded video with liveness for presence, a face match tying the person to the paper.
Control that matters: human review of automated checks. Scores flag; a person approves — and re-verification should target the doubt (address, say) instead of restarting everything.
3 · Underwriting
The bureau pull, verified income and existing obligations become a decision: amount, tenure, rate, fees — within product policy. In digital journeys, bureau gates make this instant for clean files; edge cases go to a human with the whole file on one screen.
Control that matters: policy visibility. Whether human or automated, the decision should be explainable from recorded inputs and configured rules.
4 · Contract
Approval issues the loan number and generates the paper: KFS with APR, sanction letter, agreement — signed digitally via Aadhaar OTP. If terms change after approval, the pack regenerates and consent is re-collected.
Control that matters: the numbers on the disclosure must be the numbers on the loan, mechanically.
5 · Mandate
Before money moves, the collection rail gets built: an eNACH mandate registered and authorised by the borrower, with a cap that survives penalties and a frequency the destination bank accepts.
Control that matters: sequence. Mandate before disbursal — afterwards, the leverage is gone.
6 · Disbursal
Net disbursal is computed to the rupee, the payout account is penny-drop verified, and release passes through maker-checker: one person prepares, a different person approves, send-backs carry reasons.
Control that matters: readiness gates plus separated hands. No complete file, no queue; no second pair of eyes, no release.
7 · Collections
Auto-debit presents EMIs on schedule; payment links, reminders and part-payments cover the rest. Every outcome — success, bounce, penalty, waiver — posts to the ledger as it happens.
Control that matters: money semantics. Penalties included in links, discounts recorded as waivers, part-payments capped to dues — so the ledger stays the truth.
8 · Recovery — or the re-loan
Accounts past 90 days move to a dedicated recovery desk with its own authority (settlements behind permissions) and its own communication identity. Meanwhile the clean majority becomes the real prize: repeat borrowers with instant re-loan approval within caps, mandate reuse included — the cheapest book a lender will ever build.
Control that matters: separation at one end, recognition at the other. Hard cases get scoped authority; good customers get a one-tap path back.
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