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Functional Testing a Tailored NBFC Software for Educational Loans

About Client:

Client is a pro-education NBFC poised on serving the financing gaps in the Indian education sector, with its focus on students and scaling the education infrastructure through innovative financial solution delivery.

The client offers refinancing options to students, executive education loans, and infrastructure financial models for schools, colleges, education institutions. It offers student loans including tuition fees, living expenses, etc., studying abroad loans, and loans to educational institutions, including coaching institutes and school buses.

Client Requirement:

Client has chosen two of the leading NBFC Software Vendors to create Loan Origination and Management process by leveraging their proprietary Loan Origination System (LOS) and Loan Management System.

Client has requested a customization to Loan Origination System for Education Loan, School Feeds, Education Supplier Loan and Educational Institutional Loan. This customized solution has integrated with various systems including LMS and lead generators – Customer Portal, CRM, Mobile Application and Manual introduction.

Now, after employing LOS & LMS, client has come across three Functional Testing requirements; the first requirement is testing the customized LOS; the second requirement is testing Loan Management process implementation; the third and the most important –performing integration testing of LOS & LMS.

Proposed Solution

We performed the Functional Testing in two stages: the first stage was completely focused on Testing the Customized LOS, and the second stage was focused on Loan Management.

The first requirement – Testing Customized LOS

After the customization, there were gaps between customized LOS and the client expectations. So, client’s team has done a thorough Gap Analysis and created a document.

With the Gap Analysis document provided to us, we understood the Gap Analysis. By leveraging our LOS domain knowledge and our previous experience in Testing LOS, we have created an understanding document which became Business Requirement document.

Based on this Business Requirement document, we defined positive and negative Test Cases around the major steps:

Case Initiation: This stage includes four step-by-step procedure:

  • Step 1: Case Initiation
  • Step 2: Data Entry Maker
  • Step 4: Data Entry Checker (Data Correction)

Credit Stage: This stage includes Credit Underwriting and Credit Approval.

Post Approval: This stage includes post approval activities such as Rate of Interest or Processing Fees Negotiation, Sanction Condition fulfillment and DRF entry.

Disbursement: This stage includes the disbursal maker & authorization, data push into LMS and post disbursement process.

Third Party Verifications: This stage includes Verification Trigger, Sending Required Information to Vendor, Update Verification Report and Underwriter Acceptance of various third-party verifications viz FI, Legal, Technical, Personal Discussion and Risk Verification.

After Test Case creation, Test Cases were sent to Client team’s review and modifications were as per their feedback. Before executing all the Approved Test Cases, we have prepared a smoke Test Suite and executed it to understand the functional stability and to get the confidence to go ahead with all approved test cases.

After Test Execution, defects were categorized as Blocker, Critical, Major and Minor, and reported in client preferred defect tracking tool.

The second requirement – Testing Loan Management Process Implementation

After the loan is approved, Loan Management process is initiated where various servicing activities like Rate changes, payment, postponements, early settlements etc., are performed. By leveraging previous LMS testing experience, we have developed positive and negative Test Cases around the following:

  • Tranche or Additional Disbursement
  • Auto Rate Reviews, Payment Change
  • Unplanned EMI Holidays
  • Re-Aging, Restructure
  • Payment Schedule
  • Partial Settlement
  • Early Settlement
  • Write-Off
  • Past due Charge Recovery
  • Manual Suspense
  • Provisions
  • Transaction Flagging
  • Write-Off Payment
  • Miscellaneous Postings
  • Bulk Rate Changes
  • Repayment Hierarchy
  • Bucketing
  • Mandate Swapping
  • Add Terms
  • Remove Terms
  • Recalculate
  • Change Frequency
  • Re-Scheduling
  • Basic Detail Maintenance
  • Loan Cancellation
  • Change Gestation Period
  • Postponement
  • Hold EMI

More than 3000 Test Cases were developed and sent for client team’s approval. Modifications were done as per client team’s feedback and all the approved Test Cases were executed, and defects were categorized as Blocker, Critical, Major and Minor, and reported in client preferred defect tracking tool.

The third requirement – LOS & LMS Integration Testing

This is the most important requirement and the highest priority phase of our project. As both systems – LOS & LMS are from different vendors, there were a lot of integration issues initially. Our testers have become the client’s extended testing team and worked together with the client’s vendor teams. We have been updating them with integration issues related Data, Functionality and Transactional flows.

Finally, the end product was a tailored LOS & LMS integrated solution with the highest quality.


  • Gaps between client expectations and customized LOS have been eliminated
  • Enhancements were suggested, which contributed to the overall usability
  • More than 900 Critical and Major defects were reported, thus significant improvement in Functional Accuracy
  • Defects were report separately for customized LOS, and integration issues with LMS.
  • Operational inefficiencies were identified and mitigated


ClicQA believes “A Satisfied Customer is the Best Business Strategy of All”, so we go beyond our scope of work for our clients. By becoming the client’s extended testing team, we have tested the customized LOS, LOS integration with LMS and the LMS. We have contributed our utmost to improve Functionality and Usability of the tailored integrated solution, which resulted in having a flawless LOS & LMS process implementation for educational loans.