Introduction: On August 14, 2023, the Reserve Bank of India (RBI) unveiled plans to initiate a pilot project for a Public Tech Platform for Frictionless Credit. This initiative is in alignment with the Statement on Developmental and Regulatory Policies released on August 10, 2023. The platform is being developed by the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the RBI.
Background: With the rapid advancement of digitalization, India has embraced the concept of digital public infrastructure. This approach encourages various entities including banks, non-banking financial companies (NBFCs), FinTech firms, and startups to create innovative solutions in the domains of payments, credit, and other financial activities. However, despite the digital transformation, there remains a challenge in delivering credit efficiently due to fragmented data spread across different entities such as government bodies, banks, credit information companies, and more.
The Frictionless Credit Platform: The Public Tech Platform for Frictionless Credit aims to overcome these challenges by facilitating the seamless flow of digital information required for credit appraisal to lenders. This end-to-end digital platform is designed with an open architecture and open Application Programming Interfaces (APIs). This design will allow all players in the financial sector to seamlessly connect using a ‘plug and play’ model.
Key Features:
1. Efficiency in Lending: The platform is expected to significantly enhance the lending process’s efficiency by reducing costs, enabling quicker disbursement, and ensuring scalability.
2. Pilot Project: The platform’s rollout will commence as a pilot project in a phased manner, focusing on specific access to information providers and use cases. This calibrated approach is designed to ensure a smooth and effective launch.
3. Initial Products and Services: During the pilot phase, the platform will focus on several financial products, including:
- Kisan Credit Card loans up to ₹1.6 lakh per borrower
- Dairy Loans
- MSME loans without collateral
- Personal loans
- Home loans
4. Data Integration: The platform will integrate various services and data sources, 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 cooperatives
- House/property search data
Commencement of the Pilot: The pilot phase of the Public Tech Platform for Frictionless Credit is set to begin on August 17, 2023.
The introduction of this platform marks a significant step in revolutionizing the credit delivery process in India. By integrating data from various sources and providing an open platform for financial players, the RBI aims to foster a more efficient and streamlined credit ecosystem that benefits both lenders and borrowers. As the platform progresses and expands its scope, it is expected to play a crucial role in enhancing financial inclusion and credit availability in the country.
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Reserve Bank of India
August 14, 2023
Reserve Bank of India to Launch the Pilot Project for Public Tech Platform for Frictionless Credit
As part of the Statement on Developmental and Regulatory Policies released on August 10, 2023, Reserve Bank of India (RBI) has announced the development of a Public Tech Platform for Frictionless Credit. The Platform is being developed by Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of RBI.
2. With rapid progress in digitalization, India has embraced the concept of digital public infrastructure which encourages banks, NBFCs, FinTech companies and startups to create and provide innovative solutions in payments, credit, and other financial activities. For digital credit delivery, the data required for credit appraisal are available with different 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.
3. The Public Tech Platform would enable delivery of frictionless credit by facilitating seamless flow of required digital information to lenders. The end-to-end digital platform will have an open architecture, open Application Programming Interfaces (APIs) and standards, to which all financial sector players can connect seamlessly in a ‘plug and play’ model.
4. The Platform is intended to be rolled out as a pilot project in a calibrated fashion, both in terms of access to information providers and use cases. It shall bring about efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability.
5. During the pilot, the platform shall focus on products such as Kisan Credit Card loans up to ₹1.6 lakh per borrower, Dairy Loans, MSME loans (without collateral), Personal loans and Home loans through participating banks. 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. Based on the learnings, the scope and coverage would be expanded to include more products, information providers and lenders during the pilot.
6. The Pilot of the Platform shall commence on August 17, 2023.
(Yogesh Dayal)
Chief General Manager
Press Release: 2023-2024/750
