Reserve Bank of India (RBI) Governor Shaktikanta Das on the concluding day of the three-day long Monetary Policy Committee (MPC) meeting on August 10, 2023, announced to expand the scope of end-to-end credit delivery debt platform in order to reach the underserved areas for better financial penetration.
“RBI is developing the platform in association with the Reserve Bank Innovation Hub (RBIH),” Das said while announcing the RBI Policy.
In 2022, RBI, in collaboration with the Reserve Bank Innovation Hub (RBIH), initiated the digital lending pilot project for frictionless credit delivery. The pilot started with Kisan Credit Card (KCC) loans and later expanded to include dairy loans, too. The KCC loans under the pilot project are operational and available in five districts as of now, in Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra, while dairy loans are available in a few districts in Gujarat, according to the announcement today.
Keeping in mind the success of the pilot, RBI has planned to increase its scope and develop the abovementioned digital platform, which according to the RBI, “will have an open architecture and open Application Programming Interface (API) and Standards” and to which all player can easily connect in a ‘plug and play’ model.
The purpose of this initiative is to connect all the lenders and borrowers. The common platform is intended to serve the population in the underserved regions of the country and help in the high penetration of credit facilities and resultantly in improved financial inclusion.
The announcement says that the demand, both in urban and rural areas continues to be high.
“High growth in agricultural credit and improving sales volume of major fast moving consumer goods (FMCG) companies suggest an incipient recovery in rural demand, which will be reinforced by improving kharif prospects”.
The platform is planned to be rolled out in a phased manner in the pilot launch.
The digital platform is likely to bring transparency in the lending domain, along with efficiency in the process, reduction in cost, fast disbursement, and scalability.