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There are various kinds of loans available in the market – business loans, machinery loans, for business owners, personal loans, automobile loans, home loans, etc. It is often difficult for lenders to find potential borrowers. During such times, the role of a DSA or direct selling agent is important.
This article explains meaning of DSA, eligibility and documents required. It also narrates benefits of being a DSA.
What is a loan DSA agent?
The full form of DSA is Direct Selling Agent. A direct selling agent (DSA) is affiliated with a bank or non-banking financial company (NBFC).
DSA’s key job is to find potential borrowers for the bank of NBFC. For the borrower, it is beneficial to obtain a loan through DSAs as they are responsible for paperwork and other formalities. Borrowers do not have to visit the bank often for application and other paperwork. Most of these formalities are carried out by a DSA.
How does a DSA help?
Bridging between a lender and borrower is not the only job of a DSA. Here DSA works and helps the lender as well as the borrower.
- Identifying the potential borrower: A DSA identifies potential borrowers and acts as the first touchpoint for the borrower. He/she explains details of loan schemes suiting their requirements.
- Helping in filling in the application form: Filling in an application form is a tedious process for many borrowers. On the other hand, DSAs are familiar with the process and hence, help borrowers in filling in the form.
- The first screening of documents: DSAs ensure that all documents from borrowers are in place. They also do an initial assessment of documents and ensure the borrower’s eligibility for the specified loan scheme.
- Uploading the documents: After the initial assessment of documents, DSAs help borrowers upload their documents, which then go to the lending institution for processing.
DSAs earn commission behind every loan disbursed through them. The higher the loan, the higher is commission.
However, just because you referred someone to the bank and helped them with the loan process, does not mean you become a DSA. One needs to be a registered DSA to carry out this job.
Process for DSA registration
Although the registration process changes depending on a bank or NBFC. However, there is a DSA registration process that is generally followed by several lending firms.
- Visit the lending institution and submit an application.
- You may have to pay for the application charges/DSA charges along with the application.
- After your application is processed bank/NBFC will contact you. Then, you may again have to visit the lending institution with your documents.
- Your documents are verified. The lending institution also checks your credit score.
- Then, the lending institution will initiate a background check.
- Once all documents are verified and the result of the background check is positive, the lending institution will share the DSA registration agreement will be shared with you.
- You need to fill in the details on the registration. You may have to pay stamp duty. Submit it to the lender.
- Then, a DSA code will be issued to you.
- Once the DSA code is issued, you become an authorised agent of the lending institution and are eligible to sell loan schemes.
Eligibility criteria to become a DSA
- The minimum age required is 18.
- You need to have a high credit score.
- There is no necessity that you need to be a full-time DSA. You can be a student, professional, salaried or non-salaried individual or a company, you can opt to register as a DSA of any lending institution.
- Although there is no requirement of specific educational qualification, you nee to have good knowledge about the lending institution and its various products that you will later be selling.
Documents required for DSA registration
Here is a list of documents generally required for DSA registration.
- Identity proof: Aadhaar card/PAN card/Voters ID/Passport
- Address proof: Aadhaar card/Voters ID/Passport/latest utility bills
- Address proof of the business (in case you are applying as a company)
- Your bank statement for the last three months if you are applying as an individual. Your company’s bank statement in case if your company is applying to be a loan DSA agent.
- Recent Form 16 or Income Tax returns (ITR)
- Company’s registration proof (if applying as a company)
- GSTIN (if applying as a company)
- Passport size photos
Apart from the list mentioned above, some banks or NBFCs also ask for educational proofs.
Becoming a DSA is a viable option for many budding entrepreneurs as it does not much investment. Also, it does not require specific educational qualifications. However, you need to learn about various loan schemes offered by the bank. Also, you need to update your knowledge regularly, since loan schemes, rates of interest on loans and other terms and conditions are changed regularly. One factor that you need to improve your credit score if it is poor.
Frequently asked questions (FAQs) about DSAs in India
Here are answers to some FAQs related to DSAs.
What are the benefits of becoming a DSA?
How much commission does a DSA earn?
Does bank or NBFC issue a license to DSAs?
What if your credit score is low?