On Friday, it was asserted by The Reserve Bank of India that it would adapt and introduce a pilot project to completely digitize the Kisan Credit Card lending, which is formulated by the Central Bank and its subsidiary unit Reserve Bank Innovation Hub (RBIH). The motive behind doing so is to accelerate the loan cycle.
RBI Digitising Kisan Credit Card
“Commencing in September, the project would entail automation of various processes within banks and integration of their systems with the service providers. The proposed digitization aims to make it more efficient and reduce costs for borrowers”, mentioned by livemint.
“This pilot project on digitization 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 organization said.
KCC Scheme, How Beneficial It May Be To Digitize
Introduced in 1998, The Kisan Credit Card (KCC) scheme provided such card facility, based on their land holdings, to the farmers with which they were able to get major financial assistance with a minimum in return. At the start, they were allowed to purchase ready-made farming products including seeds, fertilizers, and pesticides. Moreover, they were also allowed to borrow cash on an immediate basis for their farming needs. But the has been revised long ago now.
“Rural finance encompasses a range of financial services offered to rural customers, including farmers, at all income levels”, said RBI. “In a country like India, rural credit is closely related to inclusive economic growth, as it caters to the requirements of agriculture and allied activities, ancillary industries and small businesses”, further added.
“At present, the process for getting such finance requires a 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,” Central Bank said while also discussing that the whole process of lending the amount starting from loan application to the amount disbursement takes too much time, around two weeks to four weeks.
“Considering the challenges associated with rural finance in India, digitization of various aspects of rural finance is an important objective of its fintech initiatives”, it informed.
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“The project would start 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,” informed RBI
