India’s central bank to pilot scheme to facilitate ‘frictionless credit’

The Reserve Bank of India (RBI) is launching a digital lending pilot project to trial ‘frictionless credit’ through its new Public Tech Platform.

The RBI said the Public Tech Platform will “facilitate the smooth provision of credit by ensuring the effortless transmission of essential digital data to lenders.

The RBI said the platform is being developed by the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the central bank.

It said the “comprehensive digital platform will operate with an open structure… and established standards, enabling all participants in the financial sector to effortlessly integrate through a ‘plug-and-play’ approach”.

The RBI said the platform will improve efficiency in the lending process in terms of reduction of costs and quicker disbursements.

The central bank said that the pilot project will focus on loans of up to Rs 1.6 lakh (£1,500) per borrower, micro and small business loans (without collateral), personal loans and home loans through participating banks.

The RBI said if the pilot is successful it would be expanded to include more products, information providers and lenders.

Commenting on the RBI’s initiative, Anil Pinapala, CEO of FlexPay by Vivifi, said: “The RBI’s initiative to launch the Public Tech Platform for deepening credit penetration is a welcome move and a positive step forward. We are optimistic about its expansion beyond the initial phase, and also hope that NBFCs (non-banking financial institutions) and fintech firms like ours will get the chance to participate.”

He added: “By integrating banking, credit, and even corporate and governmental information, it facilitates swift and dependable underwriting which will, in turn, extend credit accessibility to segments of the population that were previously underserved.”

Karthikeyan K, Co-founder & CTO of KreditBee, was also positive about the initiaitve. He said the public tech platform “would facilitate a smooth flow of necessary digital information to lenders, enabling the supply of ‘frictionless finance’”.

He said: “It will make the lending process more efficient by lowering costs, enabling faster distribution, and improve scalability. Additionally, this platform will promote multiple players, including banks, non-banking financial companies (NBFCs), FinTech businesses, and startups, to work together to develop and provide solutions in the areas of payments, credit, and other financial service,” he added.


India’s inflation ‘could remain elevated in coming months’

India’s retail inflation rose to a 15-month high of 7.4% in July, could remain elevated in coming months, according to a new report from the finance ministry.

The Department of Economic Affairs, in its July Monthly Economic Review report, said that “inflationary pressures have re-emerged”, driven by a stuttering global economy coupled with domestic pressures.

“Going forward, while domestic consumption and investment demand are expected to continue driving growth, global and regional uncertainties and domestic disruptions may keep inflationary pressures elevated for the coming months, warranting greater vigilance by Government and the RBI,” the report said.

“The government has already taken pre-emptive measures to restrain food inflation which, along with the arrival of fresh stock, is likely to subside price pressure in the market soon. The external sector requires a closer watch to strengthen merchandise export growth in the face of slowing global demand,” it said.

While the report suggests that retail inflation could remain high for the next few months, it indicates that the “uneasiness in food inflation is likely to subside”.

It went on to highlight that disruptions on the global front led to high inflation in India, with specific food commodities such as cereals, pulses and vegetables, mainly driving the increase. All these categories exhibited double-digit growth in July, compared with the corresponding period last year, it said.