The Reserve Bank of India's (RBI) Public Tech Platform, a pilot project for effortless credit delivery by connecting lenders and borrowers, is set to commence today, August 17, 2023.
The platform will facilitate non-collateral Micro, Small and Medium Enterprises (MSME) loans, Kisan Credit Card loans up to Rs 1.6 lakh per borrower, and dairy, personal, and home loans through participating banks to enhance credit penetration into underserved areas.
How Does The Platform Work?
The platform aims to create a shared space for various central and state government entities, banks, credit information companies, digital identity authorities, etc., to share data for credit appraisal.
"For digital credit delivery, the data required for credit appraisal are available with 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," said RBI.
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By collating this information, the digital platform is expected to bring transparency, efficiency, cost reduction, faster disbursement, and scalability to the lending process.
"The platform shall enable linkage with services such as 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 etc.," RBI says.
Karthikeyan K, co-founder and CTO of KreditBee says that the public tech platform will streamline the flow of digital information to lenders, leading to smoother credit delivery. He says this will result in lowered costs, quicker distribution, and enhanced scalability.
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The platform is designed to have an open architecture and open application programming interface (API) standards, allowing players to connect in a 'plug and play' model easily.
Says Souparno Bagchi, COO of Balancehero India: "The launch of RBI's public tech platform for frictionless credit is a ground-breaking step with substantial advantages for lenders. This initiative simplifies the integration of vital financial data through open APIs, boosting operational efficiency. Centralizing potential borrowers' information on a unified platform streamlines processes."
"The 'plug and play' model encourages innovation, driving the lending sector toward greater accessibility, cost reduction, and efficiency," Bagchi said.
Anil Pinapala, founder & CEO of Flexpay by Vivifi, expressed optimism about the platform's expansion to include NBFCs and fintech firms. "Integrating banking, credit, corporate, and governmental information enables swift and reliable underwriting," he says.
Based on the learnings from this pilot project, RBI plans to extend the scope and coverage to include more products, information providers and lenders during the pilot.
