Page 39 - BANKING FINANCE NOVEMBER 2023

ARTICLE

sans-collateral to MSMEs, and personal and home loans that processing of farm loans took 2 to 4 weeks and
through participating banks. costs about 6% of the loan's total value.
d) The platform will work on data integration meaning It 5) Improves Efficiency - It centralizes potential borrowers
will link with various services like Aadhaar e-KYC, land information on a unified platform streamlines processes.
records from on boarded state governments (Madhya
6) Seamless - The participation of banks, NBFCs, fintech
Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and
firms, and start-ups in this platform aligns with the
Maharashtra), Satellite data, PAN Validation, dedication to seamless credit and payment solutions.
Transliteration, Aadhaar e-signing, account aggregation
by account aggregators (AAs), milk pouring data from 7) Foster innovation - The 'plug and play' model
select dairy co-operatives, house/property search data encourages innovation, driving the lending sector
etc. towards greater accessibility, cost reduction and
efficiency.
e) The platform itself is NOT a lending or credit issuing
8) Improved Credit Risk Management - The platform
facility. It will only collate or compile data from various
serves as a foundation for more advanced credit risk
agencies and present it to lenders operating through
the platform. assessment and comprehensive credit portfolio
management. By leveraging better quality information,
lenders can make data-driven credit evaluations more
Advantages of the Platform efficient. This leads to more informed decisions
1) Simplification - It simplifies the integration of vital regarding the risk associated with lending to specific
financial data through open Application Program borrowers.
Interface(API).
9) Improves credit accessibility - It can leverage the
2) Scalability - It ensures that credit or other financial contemporary advances in digitisation of information
instruments are extended to a larger set of borrowers and ensures that small-ticket loans are made available
with good credit history. World Bank pointed out that in a timely and cost-effective manner. In 2021, NABARD
improved access to information provides the basis for economist observed that 'even among well-developed
fact-based and quick credit assessments. regions, only a fifth of the more than 12.5 crore small
3) Productive investment - The borrowers would benefit and marginal farmers have access to institutional credit.
by the resulting lower cost of accessing capital, which
would translate into productive investment spending. This platform will promote multiple players, including banks,
non-banking financial companies (NBFCs), FinTech
4) Cost effective - This platform reduces the multiple visits
businesses, and startups, to work together to develop and
to bank to avail formal credit and costs associated with
it. The simplified process is expected to make credit provide solutions in the areas of payments, credit, and other
transactions smoother and faster. RBI survey indicated financial service. So we see that the "Public Tech Platform
for Frictionless Credit" is designed to usher in a more
inclusive, efficient, and technologically-driven era for credit
lending in India. By combining enhanced risk assessment with
streamlined processes, the platform aims to benefit both
borrowers and lenders, ultimately fostering economic
growth and financial stability.

The platform will surely help in significantly reducing the
turnaround time, which would lead to better operational
efficiency.

Reference :
1. https://www.livemint.com/
2. https://www.thehindu.com/

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