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Definition of 'Automated Underwriting'

Definition: This is a loan underwriting decision that is totally computer-generated.

Description: It is irrational to expect zero mistakes from humans. Whenever a financial institution receives loan application, processing it and taking the correct decision as to its sanction are quite time consuming and prone to human errors.

On the other hand, automated underwriting involves screening of loan applications through pre-designed computer programs (commonly known as automated underwriting engines) which results in faster and efficient decision making on the sanctioning of the loan application. These automated underwriting engines generate almost instant decision on loan applications, thereby saving time.

Also, since it is algorithm driven, decisions taken are generally free from human errors.

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