RBI may give NBFCs access to public tech credit platform for data flow

PTPFC knits data residing in various entities like governments, account aggregators, banks, credit information companies

The Reserve Bank of India (RBI) may allow non-banking financial companies (NBFCs) access to the public tech platform for frictionless credit (PTPFC).

Developed by the Reserve Bank Innovation Hub (RBIH) – a wholly owned subsidiary of the central bank – it enables seamless flow of digital information to lenders. The platform is to have an open architecture, which regulated entities can connect in a ‘plug-and-play’ model.

Industry sources said the RBI had indicated that it is open to widening PTPFC to NBFC participation: Both legacy and fintechs.

The idea behind PTPFC is to knit data residing in all manner of entities: Central and state governments, account aggregators, banks, credit information companies, digital identity authorities. And do away with the hindrance to frictionless and timely delivery of credit.

The PTPFC pilot, launched in 2023, focused on products such as fully digital Kisan Credit Card (KCC) loans up to Rs 1.6 lakh per borrower, and financial support to dairy, small businesses, vehicle and tractor purchases, digital gold and home purchases through participating banks. It stitched Aadhaar e-KYC, land records from the on-boarded state governments (Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra), satellite data, PAN Validation, transliteration, Aadhaar e-signing, account aggregators (AAs), milk-pouring (data) from select dairy co-operatives, and property search data. Based on the learnings, the scope and coverage is to be expanded to include more products, information providers and lenders.

The Report on Currency and Finance FY24 had noted that given the end-to-end digital processing, PTPFC has demonstrably reduced the turnaround time of KCC loans to less than an hour from a few weeks. Speaking on the sidelines of an Assocham event in October last year, RBI executive director Ajay Kumar Choudhary said banks had disbursed over Rs 1,400 crore in loans on platform since its launch (on August 17, 2023).

PTPFC’s footprint is widening. In February this year, the government permitted the GST Network to share data (based on the consent of firms) on this platform to help entities get loans faster. And later in April, the National Bank for Agriculture and Rural Development (NABARD) developed a loan-origination system portal to facilitate digital KCC processing for cooperative banks and regional rural banks (RRBs). Nearly 351 district and state cooperative banks, and 43 RRBs gained access to a range of services including digital state land records, satellite data, KYC, credit history and transliteration for more effective credit underwriting. It is expected that the collaboration between NABARD and RBIH will streamline the lending process and reduce the turnaround time for loans from three to four weeks to just five minutes for the country’s 120 million farmers.