Soon, you will get loans in minutes; RBI announces Public Tech Platform for Frictionless Credit

Reserve Bank of India (RBI) has announced the development of a Public Tech Platform for Frictionless Credit. The Platform is being developed by the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of RBI.

The Platform would be rolled out as a pilot project on August 17, 2023, in a calibrated fashion, both in terms of access to information providers and use cases. The platform also has an open architecture, open Application Programming Interfaces (APIs), and standards, to which all financial sector players can connect in a ‘plug and play’ model.

Lenders often need multiple sets of information before approving a credit or loan. At present, data required to sanction a loan or credit are available from various entities such as Central and State governments, account aggregators, banks, and credit information companies. The data required from various sources has created hindrances in the frictionless and timely delivery of rule-based lending. It takes a number of days, often a week or even months, to facilitate loans.

Once the platform starts functioning it would integrate disparate pieces of digital data from across the ecosystem into a cohesive, unified view by centralizing potential borrowers’ information on a unified platform.

“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”, RBI said.

According to RBI notification, the platform shall initially 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 learning, the scope and coverage would be expanded to include more products, information providers and lenders during the pilot.