RBI arm to develop digital platform to enable frictionless credit delivery

RBI arm to develop digital platform to enable frictionless credit delivery

Subject: Economy

Section: Monetary Policy

In News: A digital public tech platform is being developed by its wholly-owned subsidiary, Reserve Bank Innovation Hub (RBIH), to enable the delivery of frictionless credit by facilitating the seamless flow of required digital information to lenders.

Key Points:

• The end-to-end digital platform will have an open architecture, open Application Programming Interfaces (APIs) and standards, to which all financial sector players can connect seamlessly in a ‘plug and play’ model.
• 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.
• The digital public tech platform to aid end-to-end digitalisation of the lending process in a paperless and hassle-free manner is expected to facilitate credit flow to the underserved in rural areas and other vulnerable sections of the society.
• The RBI’s “Statement on Developmental and Regulatory Policies” noted that with rapid progress in digitalisation, India has embraced the concept of digital public infrastructure which encourages fintech companies and start-ups to create and provide innovative solutions in payments, credit, and other financial activities.
• The statement underscored that for digital credit delivery, the data required for credit appraisal are available with different entities like Central and State governments, account aggregators, banks, credit information companies, digital identity authorities, etc. However, they are in separate systems, creating hindrance in frictionless and timely delivery of rule-based lending.