RBI launches pilot project for digitalisation of lending under Kisan Credit Card scheme

The Reserve Bank of India (RBI) on Friday said it has taken up a pilot project for end-to-end digitalisation of Kisan Credit Card (KCC) lending.

The project, developed by the Reserve Bank Innovation Hub (RBIH) in association with RBI, would entail automation of various processes within banks and integration of their systems with the service providers, the central bank said in a statement.

The proposed digitalisation of the KCC lending process will make it more efficient, reduce costs for borrowers and reduce TAT (Turn Around Time) significantly, it added.

The pilot will commence in September 2022 in select districts of Madhya Pradesh and Tamil Nadu with Union Bank of India and Federal Bank, respectively, as partner banks and with active cooperation of the respective State governments.

Based on the learnings from the pilot, it is planned to expand the digitalisation of KCC lending to other districts in these two States and gradually across the country, RBI said.

“This pilot project on digitalisation of KCC lending is expected to play a pivotal role in facilitating credit flow to the unserved and underserved rural population by making the credit process faster and more efficient. When fully implemented, this has the potential to transform the rural credit delivery system of the country,” the statement added.

RBI noted that at present, the process for getting rural finance (financial services offered to rural customers, including farmers, at all income levels) requires customer to visit a bank branch in-person along with the proof of land ownership and other documents.

“Sometimes, the customer may be required to visit the bank branch multiple times. The Turn Around Time (TAT) from loan application to disbursement has also been rather high, ranging from two to four weeks,” the central bank said.