Reserve Bank’s Groundbreaking Move: Launching Pilot Initiative For Seamless Digital Credit Process
New Delhi, 14th August 2023: The Reserve Bank is set to initiate a pilot initiative for a ‘Public Tech Platform’, aimed at streamlining the credit process by ensuring the seamless transfer of necessary digital data to lenders.
During this trial phase, the platform will primarily focus on facilitating products such as Kisan Credit Card loans (up to Rs 1.6 lakh per borrower), dairy loans, collateral-free MSME loans, personal loans, and home loans. This effort involves collaboration with participating banks, as stated in an official release by the central bank.
The platform is designed to establish connections with key services like Aadhaar e-KYC, land records sourced from state governments (including Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra), satellite data, PAN validation, Aadhaar e-signing, and housing/property search information, among others.
As conveyed by the RBI, based on the lessons learned during the pilot phase, the initiative’s scope and inclusiveness will expand to incorporate more financial products, data providers, and lenders.
The pilot launch of this platform is scheduled for August 17, 2023. With the rapid advancement of digitalization in India, the nation has enthusiastically embraced the concept of digital public infrastructure. This environment encourages various financial entities like banks, NBFCs, FinTech companies, and startups to innovate and provide novel solutions for payments, credit, and other financial operations.
In the realm of digital credit delivery, the required data for credit assessment are dispersed across different sources, including central and state governments, account aggregators, banks, credit information agencies, and digital identity authorities. However, their separation into distinct systems often leads to delays in rule-based lending.
The Public Tech Platform aims to address this challenge by facilitating a smooth flow of essential digital data to lenders, thereby enabling hassle-free credit delivery. This comprehensive digital platform will adopt an open architecture, utilize open Application Programming Interfaces (APIs), and adhere to standards that allow all stakeholders in the financial sector to seamlessly integrate using a ‘plug and play’ approach, according to the RBI’s description.
The rollout of the platform will follow a calibrated approach as part of the pilot project, encompassing both access to information providers and utilization cases. Its implementation is projected to enhance the efficiency of the lending process by reducing costs, expediting disbursements, and promoting scalability.
The development of this platform is being undertaken by the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the central bank. RBI Governor Shaktikanta Das announced this initiative while unveiling the bi-monthly monetary policy on August 10th.
