In early September 2022, Reserve Bank of India (RBI) had announced the digitalisation of rural finance in select districts of Tamil Nadu with Federal Bank as the partner bank, and with active cooperation of the state government. The pilot of this strategic initiative, developed by the Reserve Bank Innovation Hub, was launched in Chennai today. In a function attended by officials from Reserve Bank of India, Reserve Bank Innovation Hub and Tamil Nadu state government, the bank officially launched the pilot for Instant Kisan Credit Card (KCC).
The digital loan scheme for agricultural lending will offer a new experience to the farmers when compared to the conventional method of lending in terms of convenience and turnaround time. The platform has built-in capabilities to enable an end-to-end digital and paperless journey. The platform uses digital capabilities such as eKYC and eSign, APIs (Application Programming Interfaces) developed by the TN-eGA and machine learning (ML) capabilities. The facility aims at providing small value loans to small and marginal farmers and is designed to facilitate efficient credit flow to unserved and underserved rural populations.
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Elaborating on the initiative, Rajesh Bansal, Chief Executive Officer, Reserve Bank Innovation Hub (RBIH) said, “In India, rural credit is closely linked to economic growth. In this context, we at RBIH have developed a pilot project for the end-to-end digitalisation of the Kisan Credit Card (KCC) lending, in association with RBI. This project, now being launched in Tamil Nadu by Federal Bank with active state government participation, opens up possibilities in making frictionless credit accessible to our farmers. We look forward to the success of this project, and await its implementation across the country.”
Shyam Srinivasan, MD and CEO, Federal Bank, during his address said, “I am delighted that we, under the guidance of RBI and in collaboration with Reserve Bank Innovation Hub and Tamil Nadu state government are now able to offer solutions that can help meet the credit needs of our farmers and pave way for new opportunities for them with the help of technology. This launch will accelerate the transition towards quicker access to credit from the organised banking system and is one more decisive step in the formalisation of our economy.”
“As more and more land and other asset ownership records get digitised, we are certain that digitally powered solutions will help credit reach the doorsteps of the most deserving segments of our society. Our constant endeavour to humanise technology is visible in such efforts and it is indeed a privilege for us to reinforce our commitment to improving credit flow into newer and underserved markets. I believe the journey is now well underway and a lot more of such innovations are poised to happen,” Srinivasan added.
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