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Economy
Mahesh

23/08/23 21:17 PM IST

RBI's pilot project for facilitating frictionless credit

In News
  • The Reserve Bank of India (RBI) launched a pilot project in the form of a "Public Tech Platform for Frictionless Credit".
Public Tech Platform for Frictionless Credit
  • Developed by the Reserve Bank Innovation Hub (RBIH), It is an end-to-end digital platform that will have an open architecture, open Application Programming Interfaces (APIs), and standards to which all banks can connect in a "Plug and Play" Model.
  • The public tech platform seeks to make this process seamless by providing all the required information in one place to facilitate credit.
  • Frictionless credit is a borrowing approach that seeks to streamline the lending process for consumers.
  • Unlike the traditional credit systems, where individuals need to go through extensive paperwork, credit checks and lengthy approval procedures, frictionless credit promises a smoother and faster experience.
  • RBI's project is designed to smoothen Kisan Credit Card lending by automating various processes within the banks and integrating their systems with service providers.
Benefits
  • Before a credit or loan is approved, it often takes lenders several days, a week or even months to process several sets of information.
  • Currently, data has to be sourced from credit information bureaus, account aggregators, and banks, which has led to obstacles in the timely delivery of lending.
  • The public tech platform seeks to make this process seamless by providing all the required information in one place to facilitate credit.
  • The platform is meant to be rolled out as a pilot project in a measured way, both in terms of access to information providers and use cases.
  • The platform will help to disburse loans quicker, the central bank added.
  • During its pilot run, the public tech platform will emphasise products such as Kisan Credit Card loans of up to Rs 1.6 lakh per borrower, dairy Loans and MSME loans (without collateral).
  • The public tech platform will facilitate linkages with services such as Aadhaar e-KYC, PAN validation, Aadhaar e-signing, account aggregation and house/property search data, among other things.
Source- Business Standard

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