Reserve Bank of India launches innovative public tech platform for effortless credit

The Reserve Bank of India (RBI) is set to initiate a pilot project on August 17th for a public technology platform aimed at facilitating seamless credit transactions. This endeavour will be carried out through the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the RBI. The primary objective of this platform is to enable effortless credit transactions by streamlining the digital information flow required by lenders.

How will the platform operate, you ask? The comprehensive digital platform will adopt an open architecture, incorporating open Application Programming Interfaces (APIs) and standards. This framework will allow all participants within the financial sector to effortlessly connect, following a 'plug and play' model as described by the RBI. During the initial pilot phase, the platform will emphasise various financial products including Kisan Credit Card loans up to Rs 1.6 lakh per borrower, Dairy Loans, unsecured MSME loans, personal loans, and home loans, all facilitated through participating banks.

The platform will also facilitate integration with essential services such as Aadhaar e-KYC, land records provided by select State Governments (including 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 specific dairy co-operatives, house/property search data, and more, as highlighted by the central bank.

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The rationale behind this initiative is that India has so far lacked a comprehensive and inclusive digital public infrastructure that can bring together all stakeholders involved. For efficient digital credit delivery, the necessary data for credit assessment is distributed across various entities like Central and State governments, account aggregators, banks, credit information companies, and digital identity authorities. However, these entities operate within separate systems, leading to obstacles in the smooth and prompt execution of rule-based lending.

“The Public Tech Platform would facilitate a smooth flow of necessary digital information to lenders, enabling the supply of 'frictionless finance'. It will make the lending process more efficient by lowering costs, enabling faster distribution, and improving scalability. Additionally, this platform will promote multiple players, including banks, non-banking financial companies (NBFCs), FinTech businesses, and startups, to work together to develop and provide solutions in the areas of payments, credit, and other financial service,” said Karthikeyan Krishnaswamy, Co-founder & CTO, KreditBee on how the tech platform is going to benefit the lenders.

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