Reserve Bank of India to Launch the Pilot Project for Public Tech Platform for Frictionless Credit
Click Here to see the RBI Press Release
What is public tech platform frictionless credit?
The Public Tech Platform for frictionless credit is an end-to-end digital platform that has been developed by the Reserve Bank Innovation Hub, a wholly-owned subsidiary of the central bank
The Reserve Bank of India (RBI) has launched a pilot project for a public tech platform for frictionless credit. The platform will be an end-to-end digital platform with an open structure, open APIs, and established standards. This will allow all participants in the financial sector to integrate with the platform seamlessly, using a “plug and play” approach.
The RBI said that the platform will foster efficiency in the lending process by reducing costs, speeding up disbursement, and increasing scalability. It will do this by streamlining the flow of information between lenders and borrowers, and by making it easier for lenders to assess the creditworthiness of borrowers.
The platform will initially focus on four products: Kisan Credit Card loans, dairy loans, MSME loans, and personal loans. It will be rolled out in a phased manner, with more products being added in the future.
The RBI said that the platform is a significant step towards making credit more accessible and affordable for all Indians. It is also a step towards making the Indian financial system more efficient and competitive.
Here are some specific ways in which the platform will foster efficiency in the lending process:
- Reduced costs: The platform will allow lenders to share data and information more easily, which will reduce the need for duplicate documentation and verification. This will save lenders time and money.
- Quicker disbursement: The platform will make it easier for lenders to assess the creditworthiness of borrowers, which will speed up the loan approval process.
- Increased scalability: The platform is designed to be scalable, so it can be easily adapted to meet the needs of a growing number of borrowers and lenders.
The platform is a major initiative by the RBI to improve access to credit in India. It is a step towards a more efficient and competitive financial system that will benefit all Indians..
Who will it benefit with Public T Platform Frictionless Credit ?
The Reserve Bank of India (RBI) has announced that the pilot project for the Public Tech Platform for Frictionless Credit will focus on the following products:
- Kisan Credit Card loans up to Rs 1.6 lakh per borrower
- Dairy loans
- MSME loans (without collateral)
- Personal loans
- Home loans
The platform will also enable linkage with a variety of services, including:
- Aadhaar e-KYC
- Land records from onboarded state governments (Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra)
- Satellite data
- PAN Validation
- Transliteration
- Aadhaar e-signing
- Account aggregation by account aggregators (AAs)
- Milk pouring data from select dairy co-operatives
- House/property search data
The RBI said that the scope and coverage of the platform will be expanded to include more products, information providers, and lenders during the pilot project. This will be done based on the learnings from the pilot.
The pilot project is scheduled to begin on August 17, 2023. It is a significant step towards making credit more accessible and affordable for all Indians. The platform is expected to reduce the cost and time of obtaining credit, and to make it easier for lenders to assess the creditworthiness of borrowers.