What is RBI's Public Tech Credit Platform? How is it useful in MSME, Kisan Credit Card loans?

The Reserve Bank of India on Thursday, August 17, announced the launch of the Public Tech Platform for Frictionless Credit (PTPFC) pilot project. The PTPFC has been created by the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the central bank. The aim of the pilot project is to connect borrowers and lenders, which will make credit more accessible to millions of individuals looking for small loans.

The PTPFC will be enabling the disbursal of non-collateral based loans for Micro, Small and Medium Enterprises (MSMEs), Kisan Credit Card loans up to Rs 1.6 lakh, dairy loans, personal loans, and home loans.

How RBI's Public Tech Credit Platform works

The digital platform allows central and state government entities, banks, credit information companies, and digital identity authorities to share information. This allows the various stakeholders in the lending process to collate the data for each borrower faster leading to speedier processing of loan requests. Apart from faster dispersion of loans to borrowers, the digital platform will help in reducing costs while increasing transparency, efficiency, and scalability.

The platform has been designed to have open application programming interface (API) standards, which will allow other financial institutions to readily adopt it into their systems. Instead of having discrete information systems, the centralisation of borrower information can make it much easier for new loan applicants to avail credit facility.

How will it help in MSME and Kisan Credit Card Loans?

The effect of the PTPFC has been immediately seen with Axis Bank announcing that it will be launching Kisan Credit Card (KCC) and unsecured MSME loans to small business customers through the platform just a day after its release. The move by Axis Bank shows the potential scope for the PTPFC project. Axis Bank’s offering will be first launched in Madhya Pradesh as a pilot and will require no physical submission by borrowers.

More banks are expected to follow suit over the next few months. Once the pilot programme is over, the RBI will be taking a look at the programme and further extend the scope of the project. Future changes to the program include adding more products, and providers, as well as onboarding more lenders. As the project expands, the PTPFC is expected to further improve credit access to more underserved areas of the country.