RBI's lending innovation: Can't prove creditworthiness? Now you will still get a loan

economictimes.indiatimes.com:

RBI Governor Shaktikanta Das, while speaking on the decision of the bi-monthly Monetary Policy Committee meeting today, said that a Public Tech Platform for Frictionless Credit delivery is being developed by the Reserve Bank Innovation Hub (RBIH) for end-to-end digital lending processes. The RBIH is a wholly owned subsidiary of the RBI set up to promote and facilitate an environment that accelerates innovation across the financial sector.

The RBI, in association with the RBIH, started a pilot project in September 2022 for frictionless credit delivery through end-to-end digital processes, starting with Kisan Credit Card (KCC) loans. The pilot for KCC loans is currently operational in select districts of Madhya Pradesh, Tamil Nadu, Karnataka, UP and Maharashtra.

Recently, dairy loans have been included in the pilot project in select districts of Gujarat. Based on the learnings from these pilots the RBIH is developing the Public Tech Platform for Frictionless Credit.Innovative ways to establish creditworthiness For many farmers or dairy farmers, getting a bank loan is impossible for want of any credit history.

But the RBIH platform allows a lender to tap into the data on milk sold by the dairy farmer to Amul or the land records available with the state government to determine the payment capacity. The frictionless credit initiative, which is so far ready for farm and dairy loans, is proposed to be expanded to education loans (using the Digi Locker), MSMEs (based on Udhyam registration and GST and tax records) and even vehicle and personal loans as tests have shown that a loan can be sanctioned in less than 10 minutes.