What exactly is a ‘Public Tech Platform for Frictionless Credit’?
It will be an end-to-end digital platform with an open architecture, open Application Programming Interfaces (APIs), and standards to which all banks will be able to join in a “plug and play” format. The platform was created by the Reserve Bank Innovation Hub, a wholly owned subsidiary of the central bank.
What is frictionless credit?
Frictionless credit is a lending strategy that tries to simplify the financing process for consumers.
In contrast to traditional credit systems, which need considerable paperwork, credit checks, and lengthy approval procedures, frictionless credit promises a smoother and speedier experience.
The RBI project aims to improve Kisan Credit Card lending by automating numerous procedures within banks and integrating their systems with service providers.
How would the public tech platform aid in loan disbursement?
Lenders may take several days, weeks, or even months to evaluate several sets of information before approving a credit or loan. Currently, data must be obtained from credit bureaus, account aggregators, and banks, which has hampered the prompt supply of lending. The public tech platform aims to make this procedure easier by putting all of the necessary information in one location.
Saving money and time
The RBI noted that the platform is intended to be scaled out gradually as a pilot project, both in terms of access to information providers and use cases. The platform will aid in the faster disbursement of loans, according to the central bank. During its pilot phase, the public digital platform will focus on goods such as Kisan Credit Card loans of up to Rs 1.6 lakh per borrower, dairy loans, and MSME loans (no collateral).
Connections to other services
The public technology platform would enable connections to services such as Aadhaar e-KYC, PAN validation, Aadhaar e-signing, account aggregation, and house/property search data, among others.
Axis Bank said on August 17 that it would offer the Kisan Credit Card (KCC) and unsecured MSME loans to small company customers through the public tech platform. Kisan Credit Cards will be provided as a trial in Madhya Pradesh and will initially be available to clients for up to Rs 1.6 lakh. Axis Bank announced that MSME loans will be available across the country, with customers eligible to borrow up to Rs 10 lakh.
