For disbursements and reporting, the proposed digital platform will be integrated with the core banking systems of each public sector bank
A unified cloud-based digital platform to connect with fintech companies and source loans through them on a revenue-sharing basis will be jointly set up by public sector lenders including the State Bank of India, said people with knowledge of the matter.
Fintech companies, under the model will conduct all preliminary credit checks through a third-party application platform interface (API) and account aggregators. They will then upload the completed loan application onto this digital platform. Sharing a commission or fee with the originating fintech company, individual banks can access these loan requests and fund them based on their internal credit risk parameters.
“The idea is that the fintech firms will onboard large corporate and their suppliers or dealers for supply chain finance (SCF) business,” said a senior bank executive.
The framework will allow state-run banks to tap the extensive resource base of multiple fintech firms, reducing their own cost of sourcing loans and investing individually in expensive platforms or technologies.
“The initiative will be led by PSB Alliance Ltd, and we are in the final stages of selecting a technology service provider to develop and manage this cloud-based digital platform,” the official said. PSB Alliance Ltd has been set up by public sector banks to act as an intermediary for them.
For disbursements and reporting, the proposed digital platform will be integrated with the core banking systems of each public sector bank.
Helping banks provide credit underwriting, transaction management and other micro, small and medium enterprise (MSME) lending products, it will subsequently connect other small and medium enterprise (SME) account service firms.
With new-age fintech firms, the finance ministry has been pushing banks to explore synergies.
Leveraging the fintech system will allow small businesses and individuals excluded from the banking system to raise cheaper organised credit, said the people cited above.
PSB Alliance Ltd is envisaged as an umbrella entity that will enable public sector banks to deliver financial and non-financial banking services to the doorstep through common applications or platforms such as the proposed digital platform.
Prime Minister Narendra Modi has said the economy of any country is as progressive as its banking system is strong.
“If Jan Dhan accounts had laid the foundation of financial inclusion in the country, then fintech would form the basis of financial revolution,” he said while dedicating 75 Digital Banking Units in as many districts.
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