Indians will get loans based on data, not collateral: Nilekani

India is moving in a direction where lenders will use data like GST based "business flows" or credit payment history, instead of collaterals, to provide loans to businesses and consumers, tech billionaire Nandan Nilekani said today.
For the first time the data available in the Goods and Services Tax (GST) system can be the basis of credit, he said.
"When you file your return with GST you are actually filing it at invoice level. You can then ask GST to give your own data which you can then give to your lender. All 10 million businesses will have deep digital footprints which they can use to get loans from their banks or NBFCs," Nilekani said at All India Management Association's Foundation Day.

A member of the GST return simplification committee, Nilekani said the government is looking at simplification of GST process so that rather than making tax filing as a separate activity, it can be made a by-product of business activity.
"Suddenly data is going to be used as basis for credit. This is not data about assets. This is not collateral based lending. This is data on business flows. This is flow based lending. Fundamentally, a small business with no assets can still use its flows to get credit. This is a very important because you democratise access to credit to small business on the basis data," he said.

The economy will revive, he said, once millions of small businesses get access to credit.

Government is looking to roll out the new return filing process from next fiscal after giving suitable time to businesses to adapt to the new software and also to GST Network to develop a new system for glitch free filing of returns.
In the new system, GST returns would be auto-populated based on the invoice details filed by businesses on the GSTN portal.
"Data will enable to consumers to get credit because they have history of payments. Both the buyers and sellers have access to credit based on data. That is going to be source of growth," Nilekani said.

He said data is the most strategic asset of the 21st century and huge battles are being fought around data and technology is getting implemented in India at the population scale.
"Just to give you some numbers , there are 1.2 billion mobile , 1.19 billion Aadhaar, 582 million unique bank accounts, 462 million internet users, 375 million people on social media. Credit card used 18 years to reach certain volume. UPI has reached to that level in just 18 months. By December 2018, I expect UPI to reach 1 billion transactions a month. India will truly be on road to cash less society," he said.

The Aadhaar architect said that business model of internet companies emerged when they were economically rich and used individuals data to sell products or advertisement people but in India businesses will be data rich before they become economically rich.
"The business model of the future is not using your data to sell to you, it is you using your data to better your life. India will be only country where data will be invested. Benefit of data will not go to large companies or government but it will go to individuals and businesses,
" Nilekani said.