The move will enable the state-run banks to leverage the extensive resource base of fintech firms and reduce cost of sourcing loans
Led by PSB Alliance, the project is in the final stages of selecting a technology partner to develop and manage the proposed platform
The unified cloud-based digital platform will later be integrated with the core banking systems of the public sector banks for the disbursements of loans
Public sector banks will establish a unified cloud-based digital platform to collaborate with fintech players to facilitate loan disbursals on a revenue-sharing basis.
Sources told the Economic Times that the move will enable the banks to leverage the extensive resource base of the fintech firms. With this move, the state-run banks plan to save money in building technologies or infrastructure from scratch. The initiative will eventually help the lenders to reduce their expenditure on sourcing loans.
Elaborating on the model, sources familiar with the matter said that the fintech platforms will conduct all preliminary credit checks through a third-party application platform interface (API) and account aggregators. Subsequently, the fintech platforms will have to upload the application details on the digital platforms.
These requests will then be adjudged by lenders based on their internal credit risk parameters before releasing funds. Post the deal, the lenders will share a commission with the facilitating fintech firms.
The project will be led by an umbrella organisation of state-run banks, PSB Alliance, which is reportedly in the final stages of selecting a technology partner to develop and manage the platform.
The cloud-based digital platform would be integrated with the core banking systems of the public sector banks for disbursements of loans.
Later, the platform is expected to onboard small and medium enterprise (SME) account service firms. This will enable banks to provide products such as credit underwriting, transaction management and other lending products.
The move to establish the platform comes amid the renewed push from the central government to give greater access to credit services to the underserved sections of the society, including MSMEs.
Last year, the finance ministry directed the public sector banks to explore partnerships with fintech startups.
This move has also come at a time when the government is looking to commence full-scale deployment of its ambitious account aggregator framework, which is expected to ease the process of preliminary verification of loan applicants.
While many Indians continue to be credit-starved, the proposed digital platform is expected to spur credit penetration in the country.
