Indian central bank to pilot open banking platform using Aadhaar KYC
India’s central bank is planning a pilot program for a digital platform intended to extend the country’s digital public infrastructure and digital identity system to loans for easier credit applications.
The Public Tech Platform for Frictionless Credit proposed by the Reserve Bank of India (RBI) will bring together data required for credit appraisals, but held by different government bodies, account aggregators, banks, credit information companies and digital identity authorities, according to a bank announcement. This will enable rule-based lending through an open API that financial service providers can connect to.
The pilot will include credit card loans, dairy loans, loans to micro, small and medium-sized enterprises without collateral, and personal and home loans. To facilitate these, the platform will enable connections to the Aadhaar e-KYC service, Aadhaar e-signatures and various databases.
The phrase “open banking” is not used in the announcement, but the use of an open API and digital identities to facilitate third-party access to financial data is commonly associated with the open banking concept.
The RBI hopes the platform will increase the efficiency of loans applications and approval, reduce costs and improve access to credit.
The platform is being developed by RBI subsidiary Reserve Bank Innovation Hub, and the pilot is scheduled to begin this Thursday, August 17.