Understanding the Meaning of Direct Selling Agents (DSA) in Banking – Role and Benefits

If you are applying for a loan, you can directly apply it to the NBFC or the Bank, or you can apply it through agents known as DSA (Direct selling agents).

Who are Direct selling agents (DSA)

DSA full form is Direct Selling Agent. DSA’s job is to find potential customers for the bank or the NBFC they represent. DSAs are looking for people interested in taking a loan and will guide them through the process of it. 

DSAs connect the borrowers with the lender and take care of all the documentation required for the loan application. DSAs also do checks and due diligence to ensure that the provided documents are genuine.

A payout is provided to them for this effort that they put in for both the borrower and the lender. The payout they receive is a percentage of the loan amount, and this percentage depends on the type of loan sanctioned. In some areas, especially in rural areas, these DSAs are also known as business correspondents. And both in a rural and urban area this is a great and efficient way to make some extra money.

What Do DSAs Do?

DSAs not only connect borrowers to the lender but also they do a lot of other critical things, such as – 

• Collecting all the important documents and loan applications from the borrower with care and effort : More often than not, the applicant finds the documentation process to be very confusing, and tiring. In most cases, applicants end up going back and forth between the lenders and themselves to get the documents in place. Direct selling agents in this case can be of great help! They are well versed with the documentation requirements of the lenders, and are aware of the common gaps in documents, this can help the applicant all time, effort, and money to get the documents right!
• Conducting due diligence and checks to make sure both the loan application and other documents are correct. Since direct selling agents have extensive knowledge and experience with the documentation and the overall loan process and requirements attached to the process, they are able to find gaps more efficiently and consult the applicant with dos and don’ts of the process. Direct selling agents are aware of the red flags that lenders look for when assessing an application, and can help the applicants with removing the elements that can be misconstrued and result in rejection of loan applications.
• Ensuring that the documents provided by the lender to the borrower are genuine and are not forged documents. Direct selling agents not only make sure that the process of application is seamless for the applicants, and consult them to get the loans, but they also act as a first level verifier of the application. Direct selling agents verify the information provided by the applicant to identify any possible gaps and to ensure that the information and documents provided is genuine and free from errors and ommissions.

Collecting and submitting all these documents along with the loan application form and DSAs are supposed to provide their DSA code so that the application can be traced back to them.

Advantages of Becoming a DSA

Becoming a DSA has many advantages. A DSA plays a crucial role in the lending ecosystem. A DSA helps the banks and NBFCs find appropriate borrowers. A DSA helps borrowers find an appropriate bank that is willing to lend them money. And lastly, it helps them to make money for themselves. And nowadays anyone can become a DSA: a housewife, a working professional, a self-employed, etc., and they can make extra money on the side.

The other benefits of being a DSA are –

• You can work anytime you wish since DSAs work on flexible hours. DSA are not full time employees rather are contractual agents to the lenders, they don’t necessarily have to work out of office during office hours or have to be physically present in an office. DSAs work out of their convenience with a goal to maximize sales and drive up the revenue.
• You get to be your boss as a DSA. DSAs do not report to a manager or anyone in the company. They work for themselves, as their payout is solely the commissions from sales. Direct selling agents can work as much as they want without worrying about the sales target! It is the direct selling agents who can decide on targets and ways to achieve them! No pressure from anyone!
• You can earn a great payout in the form of commissions on the leads that you generate. Direct selling agents do not have a fixed salary or any cap on commissions. They work on a model where the number of sales or leads directly correlates to the money they’ll make. Working as a direct selling agent does not come with a minimum sales target above which commissions can be earned. However, the sales and leads generate all the money in terms of commissions.
• By becoming a DSA, you are becoming a part of the financial industry and credit industry, and these industries are one of the crucial industries of any economy. As a direct selling agent you’d be selling loans and other credit products to the wider audience, your contribution albeit on a bigger scale may be small but it boosts the lending and borrowing in the economy which helps with wealth creation and economic development of a country, by being a direct selling agent and rendering support to the financial institutions by helping them sell lending products you become a crucial part of the industry and the economy at large.
• You can earn an additional or side income from being a DSA. You don’t have to leave your current job you can do these part-time. If you are already working full time and want to have a side hustle leveraging which you want to earn additional money, you can become a direct selling agent. This venture does not require a fixed commitment concerning the number of hours one has to put in. With being a direct selling agent, you make money proportional to the sales you do. And considering the fact that this profession does not require any monetary, or time commitment. It makes for the perfect side business to earn more money while working part time!
• You can run this business without any risk, and also, this business does not have high expenditures. You can operate at minimum cost. One of the biggest advantages of being a direct selling agent is the lack of infrastructure requirement, a direct selling agent can work with minimal things. Unlike traditional businesses where you have to invest in the infrastructure to open a shop, it’s totally opposite in case of direct selling agents. You simply have to make no monetary commitments to start your business. Since there is no monetary investment involved, there is very little downside. The only risk here is of your time and effort. No monetary downside – You earn as much as you sell!
• To become a DSA, you don’t need any higher educational qualification or special degree. You just have to be a good salesperson. Being able to sell is the only skill that is required to become a direct selling agent. That too is not a formal requirement from the lenders, rather a skill which helps you become successful in this venture. Direct selling agents even if they do not have higher qualifications, they can still get their hands dirty and try. Sales is an acquired skill, the more time you spend furnishing it, the better you get at selling and the more money you make as a direct selling agent!
• The bank or the NBFC  will also provide you with the necessary training. Since you’d be selling a particular NBFC or financial institutions products, it is natural for them to render all the training material and support to help you become fit for the venture. Because, the lenders would also want you to sell as much as possible, hence you don’t have to worry about training on product knowledge in advance. You’d be supported with everything you need to get you started!
• You just have to pass the lead that you have generated to the bank or the NBFC and the rest of the financial, and technical work will be done by the bank/NBFC. One of the biggest things that budding direct selling agents are concerned with is the post lead support and implementation of the products. To put you at ease – as a direct selling agent you don’t have to worry about the back end process of how loans will be assessed and disbursed to the applicant. You have no involvement in the process of assessment of application, following lending protocols, and disbursal of funds. All you have to worry about is the sales and the leads you are generating which directly translates into your inventives. Lenders have specialized teams that look into it to ensure compliance, internal controls, and processes.
• With some NBFCs, becoming a DSA does not require any investment or deposit. Having a big team of direct selling agents helps the lenders with increasing their loan book without having to employ a full time employee, and thus is cost effective for such organizations. Some NBFCs citibg the same reason offer people to partner up with them and become a direct selling agent at no cost. Doing this helps them get higher number of DSAs as an upfront investment may discourage budding agents.

DSA Registration Process

Different banks/NBFCs have different registration processes. But this is the general process for applying for dsa loan agent registration  –

• Visit the particular bank/NBFC and submit your application to the bank/NBFC : Select the NBFCs or the lenders that you’d like to partner with. It is imperative that you compare all the companies and check for yourself who has the highest payout, and which products you’d be able to sell easily. This makes the selection criteria easy to become a DSA agent.
• Make the payments if necessary : While some lenders have no fees for onboarding DSA agents, some lenders may ask for some necessary fees, it may be put in place to ensure that only serious candidates apply for becoming a direct selling agent. Sign the DSA agreement and make necessary payments to start the onboarding process.
• The bank/NBFC will contact you after you have made the payment, and they will be asked to furnish a few documents : Lenders do background checks, to ensure that the candidates that are applying are not ghost candidates, and genuinely interested people who want to become direct selling agents. For this purpose, the lenders or NBFCs may ask you to furnish certain documents to verify your identity, onboard you, and do the necessary paperwork required for onboarding, to enable you to sell
• After you submit your documents, they will verify them, and a legal team will perform a due diligence process, and your CIBIL score and credit history will be checked : Since direct selling agents are in the lending and finance space, which is highly regulated by the authorities, the lenders or the NBFCs have to make sure that the direct selling agents are genuine candidates, who are trustworthy as well. Hence, necessary due diligence is carried out, and credit history is checked to ensure a candidate with clean history and has no past defaults with respect to lending.
• After verification and due diligence, a DSA registration agreement with the right stamp duty will be delivered to you if they don’t find any problem : Once the NBFCs are okay with your profile, and direct selling agent application, they will deliver the direct selling agent agreement to you. Make sure that you read all the terms and conditions carefully, and make an informed decision.
• Now you have to fill in some required details, then sign the agreement, and submit it : Once you’ve carefully read the terms and conditions of the agreement, and are satisfied with the same, you have to execute the agreement document, and submit it with the company as outlined in the process.
• A DSA code will be issued by the bank or the NBFC : Upon successful completion of agreement execution, a unique direct selling agent code will be issued to you by the bank or the NBFC that you’re partnering with. This DSA code will serve as an identifier for your referrals. Ensure that you have this code saved somewhere so you never misplace the same.
• Once you receive the DSA code, you can begin uploading and submitting loan applications and loan documents : Once you receive your DSA code, that means that you’re good to go for your sales adventure! Having a DSA code means that you’re now officially registered with the firm and are authorized to sell their products and propositions. So as soon as you receive the DSA code, you can start uploading and submitting loan applications and loan documents for your sales.

Direct selling agents (DSA) FAQs:

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