Credit delivery by banks: The pilot project of the Reserve Bank of India’s Public Tech Platform for Frictionless Credit announced last week will be launched on Thursday, August 17. Developed by the Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of RBI, the platform will focus on non-collateral MSME loans, Kisan Credit Card loans up to Rs 1.6 lakh per borrower, Dairy Loans, Personal loans and Home loans through participating banks.
According to RBI, it will be an end-to-end digital platform with an open architecture and open APIs and standards for lenders to connect seamlessly in a ‘plug and play’ model for a seamless flow of required digital information to them for frictionless credit delivery.
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“For digital credit delivery, the data required for credit appraisal are available with different entities like Central and State governments, account aggregators, banks, credit information companies, digital identity authorities, etc. However, they are in separate systems, creating hindrance in frictionless and timely delivery of rule-based lending,” said RBI.
With seamless access to information with lenders, “the platform is expected to bring about efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability.”
“The platform will open new horizons for use cases, products, underwriting, and market segments. For digital lending, harnessing and optimising its potential relies on legitimate access to innovative and relevant data sets. With its built-in features on customer protection, verified data, privacy and security, and open standards, the platform can bring immense value to the digital lending ecosystem and customers by converging existing and new data sets and unlocking data hitherto siloed and unstructured,” said Sugandh Saxena, CEO at fintech association FACE.
Importantly, the platform was developed based on the learnings from pilots undertaken such as the digitalisation of Kisan Credit Card (KCC) loans which was started in September 2022. The pilot had tested end-to-end digitalisation of the lending process in a paperless and hassle-free manner.
The KCC pilot is currently underway in select districts of Madhya Pradesh, Tamil Nadu, Karnataka, UP, and Maharashtra and the initial results are encouraging, said RBI. The project enables “doorstep disbursement of loans in assisted or self-service mode without any paperwork. A similar pilot is being carried out for dairy loans based on milk pouring data with Amul in Gujarat.”