With banks cutting down cost and going slow on their retail loan portfolio, the direct selling agents (DSAs) have had a tough time in the year 2008. Following a substantial growth in 2007, these agents are finding it hard to survive in the current scenario.

DSAs are basically firms that banks and financial companies make contact with to distribute their products such as home loans, personal loans, credit cards etc. This concept was introduced among foreign banks and later became familiar amid the Indian banks that expanded their retail chain.

The DSA concept complemented with ICICI Bank that turned into a major retail bank around a decade back. The bank adopted this method because during the expansion plans its branches were insufficient to distribute its products. But now the bank is planning to increase its branch network and cut down on the DSAs. This step is taken not only by ICICI but by most of the banks in the industry due to cost cutting practice.

DSAs become favourite among the borrowers because even if the loan file was rejected by one lender, DSAs of other lenders were willing to pay an incentive for rejected files and banks were happily passing on the processing fee to the DSA. However this is a picture of past as today almost all the lenders in the industry are kicking off with the DSAs.

Banks and housing finance companies (HFCs) that are cutting down on their retail business due to the slowdown are forced to turn off their DSAs. Though the lending rates are been reduced by the banks to pick up with the demand, DSAs are still not expected to see revival in the same ratio.