The Reserve Bank of India (RBI) said a digital public tech platform is being developed by its wholly-owned subsidiary, Reserve Bank Innovation Hub (RBIH), to enable the delivery of frictionless credit by facilitating the seamless flow of required digital information to lenders.

The end-to-end digital platform will have an open architecture, open Application Programming Interfaces (APIs) and standards, to which all financial sector players can connect seamlessly in a ‘plug and play’ model. “The platform is intended to be rolled out as a pilot project in a calibrated fashion, both in terms of access to information providers and use cases. “It shall bring about efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability,” Governor Shaktikanta Das said.

Facilitating credit flow

AK Goel, Chairman, Indian Banks’ Association, observed that the proposal to have a digital public tech platform to aid end-to-end digitalisation of the lending process in a paperless and hassle-free manner is expected to facilitate credit flow to the underserved in rural areas and other vulnerable sections of the society. This has the power to revolutionise the credit delivery system of the country in the future, he added.

The RBI’s “Statement on Developmental and Regulatory Policies” noted that with rapid progress in digitalisation, India has embraced the concept of digital public infrastructure which encourages fintech companies and start-ups to create and provide innovative solutions in payments, credit, and other financial activities.

The statement underscored that 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.

To address this situation, a pilot project for digitalisation of Kisan Credit Card (KCC) loans of less than ₹1.60 lakh was started in September 2022.

The pilot 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, Maharashtra and the initial results are encouraging. “The pilot also 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.

“Based on the learnings from the above pilots and expanding the scope to all types of digital loans, a digital public tech platform is being developed...,” Das said.

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