Reserve Bank of India introduced Public Tech Platform for Effortless Credit Access
MAS Team | 18 August 2023
The Reserve Bank of India (RBI) is embarking on a pioneering journey to revolutionize credit access through the launch of the Public Tech Platform on August 17, 2023. This strategic move is designed to simplify credit provisioning by offering digital information to lenders, facilitating swift credit and loan approvals within minutes.
Envisioned as a frictionless credit solution, the Public Tech Platform is a comprehensive digital ecosystem developed by the Reserve Bank Innovation Hub, a wholly-owned subsidiary of RBI. This innovative platform is characterized by its open architecture, accessible Application Programming Interfaces (APIs), and standardized frameworks, fostering seamless connectivity for all players within the financial sector through a 'plug and play' approach.
By streamlining the integration of crucial financial data through open APIs, the operational efficiency of the lending process receives a significant boost. Centralizing the information of potential borrowers on a unified platform streamlines operations. This collaborative approach involves active participation from banks, non-banking financial corporations (NBFCs), fintech firms, and start-ups. The 'plug and play' model encourages innovation, propelling the lending landscape toward greater efficiency, accessibility, and cost-effectiveness.
Lenders typically require diverse sets of information before approving credit or loans. Currently, the data needed for loan or credit approval stem from various sources such as central and state governments, account aggregators, banks, and credit information bureaus. This intricate data retrieval process has posed challenges in ensuring frictionless and prompt rule-based lending. Often, the process takes several days, even weeks or months, to facilitate loans. To simplify this intricate process, the central bank introduces the public tech platform, enabling lenders to access required digital information seamlessly to expedite credit provisioning.
This ground-breaking platform harmonizes fragmented digital data from across the ecosystem, creating a unified view. Through the amalgamation of banking, credit, corporate, and governmental data, the platform accelerates robust underwriting processes. Consequently, swift and reliable underwriting leads to extending credit access to segments of the population that were historically underserved.
The RBI indicates that the platform will be initially rolled out as a pilot project, gradually expanding its scope and coverage based on learnings gained during the pilot phase. The platform's debut focuses on various products, including Kisan Credit Card loans up to Rs1.6 lakh per borrower, dairy loans, unsecured MSME loans, personal loans, and home loans through participating banks.
Additionally, the Public Tech Platform facilitates linkage with services such as Aadhaar e-KYC, state government land records, satellite data, PAN validation, transliteration, Aadhaar e-signing, and account aggregation by Account Aggregators, house/property search data, etc. The platform ushers in a new era of secure, swift, and paperless credit access.
As an integral part of the ongoing G20 finance ministers and central bank governors' meetings, RBI showcased the transformative potential of the pilot on frictionless credit. A dedicated experience centre highlighted the revolutionary Digital Kisan Credit Card (KCC) and Digital Dairy journey. These demonstrations showcased how digitized data, combined with technology, can simplify loan processes, offering paperless and swift solutions.
Axis Bank has embraced the Public Tech Platform's potential and announced its plans to offer Kisan Credit Cards and unsecured MSME loans to small business customers through this platform. Leveraging authenticated data sources, Axis Bank aims to provide faster and improved credit services to customers, showcasing the transformative impact of the Public Tech Platform.
In conclusion, the RBI's Public Tech Platform marks a significant stride toward digitizing and simplifying credit access. With its innovative approach, collaborative engagement, and open architecture, the platform holds the promise of reshaping the lending landscape to provide faster, more accessible, and efficient credit solutions.