How does loan disbursement work?

Loan disbursement is the process by which the approved loan amount is released to the borrower. After the loan is sanctioned and all required documents are verified, the lender initiates the disbursement. The process typically involves:

• Finalising the loan agreement and obtaining signatures from the borrower.
• Verifying all documents, including identity, address, income, and, if applicable, property or business documents.
• Disbursing the funds either as a lump sum or in instalments, depending on the type of loan and its purpose.
• For business or construction loans, disbursement may be linked to project milestones or specific usage requirements.
• The funds are transferred directly to the borrower’s account, vendor, or institution as specified in the agreement.

The disbursement process ensures that the loan is used for its intended purpose and provides a clear record of fund utilisation.