By Mihir Sharma
Indians have reason to be proud of their seamless digital payment system, but now the Reserve Bank of India is looking to expand this convenience to lending. With the promise of a unified lending interface on the horizon, there are great opportunities, as well as risks, ahead.
India’s digital public infrastructure allows for interconnectedness in financial transactions. Businesses can create apps that compete based on cost and quality, rather than network size. Consumers have control over their data sharing, ensuring privacy and accountability.
The availability of detailed transfer data, along with other information like tax payments and land records, could make lending easier for farmers and small businesses. This is a key challenge for India’s financial policymakers, given the conservative nature of the public sector dominated banking system.
The central bank hopes that leveraging digital platforms with secure data will incentivize lenders to create business models for small borrowers, while still protecting citizens’ data. This innovative approach could revolutionize lending practices in India.
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