In a step towards enhancing India's financial landscape, the Reserve Bank of India (RBI) has unveiled plans to introduce an initiative — the Public Tech Platform for Frictionless Credit. This move, unveiled in the Statement on Developmental and Regulatory Policies on August 10, 2023, is under the purview of the Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of the RBI. The initiative will soon be rolled out as a pilot project in a phased manner, beginning August 17.

In the past few years, India has made rapid strides in digitalisation, which have ushered in an era of transformative digital public infrastructure. This framework encourages various stakeholders, including banks, non-banking financial companies (NBFCs), FinTech firms, and startups, to collaboratively create and deliver solutions in the realms of payments, credit, and other financial services, the RBI said in a press release.

The digital credit delivery landscape is characterised by a multitude of data points required for credit assessment, distributed among different entities such as central and state governments, banks, credit information agencies, digital identity authorities, and more. However, the fragmented nature of these systems has impeded the seamless and timely dispensation of rule-based lending processes, the central bank said.

The Public Tech Platform is poised to revolutionise credit delivery by streamlining the flow of critical digital information to lenders. Designed with an end-to-end digital infrastructure, the platform is founded upon an open architecture, making use of open Application Programming Interfaces (APIs) and industry standards. This inclusive framework beckons all participants within the financial sector to seamlessly integrate into a 'plug and play' model, fostering collaborative innovation and efficiency, the RBI said.

The initiative's aims include optimising the lending process, cutting operational costs, expediting disbursements, and enabling scalability.

The pilot phase of the platform will initially prioritise products such as Kisan Credit Card loans, Dairy Loans, collateral-free MSME loans, Personal loans, and Home loans. These services will be offered through partnering banks, creating a diverse offering to cater to various borrowers' needs. The platform's functionalities will encompass crucial services, including Aadhaar e-KYC, land records from selected state governments (Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra), satellite data integration, PAN validation, transliteration, Aadhaar e-signing, and account aggregation facilitated by Account Aggregators (AAs).

Furthermore, milk pouring data from select dairy cooperatives and property search data will be integrated into the platform. As the initiative progresses, its scope will expand to encompass additional products, information providers, and lending institutions.

First Published:Aug 14, 2023 4:19 PM IST