The Reserve Bank of India (RBI) may expand the end-to-end digitalised credit mechanism beyond the Kisan Credit Card (KCC) for all other credit requirements for the lower strata of the society.

Sharing the encouraging outcome of the pilot project on end-to-end digitalisation of KCC, M K Jain, Deputy Governor, Reserve Bank of India on Friday said that it reduced the time taken for availing credit from 3-4 weeks to 5-10 minutes while saving on costs and logistics for farmers.

He further added that once successful, “we will expand this platform to all types of credits, particularly for the bottom of the pyramid in the society.”

Integrating systems

Speaking at the the International Research Conference on FinTech: Innovation, Inclusion, and Regulation at IIM Ahmedabad, Jain said the RBI Innovation Hub’s pilot project in association with RBI for end-to-end digitalisation of KCC showed promising results. The project was launched in September 2022 to automate the processes within banks and integrating their systems with the service providers to make granting of KCC loan more efficient and economical.

“The operating cost for a farmer was 5-8 per cent, in addition to that there was an opportunity loss for him as a KCC loan took 3-4 weeks to get cleared. On a pilot basis, we got fantastic results — operating cost came to almost zero. The speed of giving the credit was brought down from 3-4 weeks, to 5-10 minutes,” said Jain, adding that the end-to-end digitalisation of KCC will be a game changer.

Stating that the fintech sector holds promise to be transformative in the financial inclusion mission, Jain said fintech has the potential to bridge the credit gap that exists due to reasons such as absence of credit scores, cumbersome documentation, manual processes etc.

“Financial inclusion is catching the global attention as in G20 also, it is one of the priority areas. ,” he said.

Access to lending institutions

He also stated that in this area, a lot of fintech players were operating, but in silos, without having a common platform to scale it up. Already, most of the States have digitalised the land records and the States are providing the access to the lending institutions through APIs, he mentioned.

“We have travelled a long distance. But on the demand side, there is still a long way to go. There is credit, insurance penetration and pension penetration, where we are lagging behind. Probably fintech can do a lot of work.”

However, he cautioned them to ensure a balance between innovation and risk arising there from. He also stated that while India has the 3rd largest fintech ecosystem in the world, it is the fintech players who have to self-regulate themselves. He also asked fintech players to focus on two areas, customer centricity and governance for the sustainable development of fintech sector.