Article’s

Abstract – This study, undertaken during a six-week internship at IDF Financial Services Pvt. Ltd., Dharwad, examines the role of digital transformation in loan processing and its impact on operational efficiency in microfinance institutions. A structured five-point Likert questionnaire covering ten statements related to digital loan processing was administered to 150 employees working across Credit Operations, Branch Operations, Field Operations, Recovery, Risk Management, and other operational functions. A one-sample t-test confirmed that the overall perception score (M = 4.09, SD = 0.30) was significantly above the neutral midpoint (t = 41.863, p < 0.001), indicating strong employee confidence that digital loan processing improves operational efficiency. Cronbach's alpha (α = 0.841) indicated satisfactory internal consistency, while Pearson correlation and multiple regression identified a significant positive relationship between digital loan processing and operational efficiency. One-way ANOVA found no significant difference in perception across departments (F = 0.517, p = 0.762) or years of experience (F = 0.698, p = 0.594), while the difference between male and female respondents was not statistically significant (t = 1.276, p = 0.204). The findings indicate that employees believe digital transformation has improved loan processing speed, documentation accuracy, and customer service, while emphasizing the need for continuous system upgrades and employee training to further enhance operational efficiency.. Key Words: Digital Transformation, Loan Processing, Operational Efficiency, Microfinance, Employee Perception.