Banking · Hub and Spoke Model in Retail Loan Processing
When a bank acts as a 'Service Provider' within its retail operations, it often utilizes a 'Hub and Spoke' model for loan processing. In this operational framework, the 'Spoke' refers to the branch office, and the 'Hub' refers to the Retail Loan Processing Center (RLPC). Considering current technological advancements, what is the primary operational objective of moving the 'Sanctioning Power' from the Spoke to the Hub in this specific model?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To shift the legal responsibility of loan defaults from the branch manager to the centralized hub manager for better accountability.
- 2To eliminate the need for Know Your Customer (KYC) verification at the branch level, thereby speeding up the loan disbursement process.
- 3To ensure a standardized appraisal process and reduce the Turnaround Time (TAT) by utilizing specialized underwriters at a central location.✓
- 4To empower branch managers to spend more time on administrative tasks and less on customer relationship management.
Correct answer
To ensure a standardized appraisal process and reduce the Turnaround Time (TAT) by utilizing specialized underwriters at a central location.
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