(MENAFN- KNN India)
Mumbai, Jan 25 (KNN) In a forward-looking move, the Reserve bank of India (RBI) is exploring the use of Central Bank Digital Currency (CBDC) to streamline the collection of micro-loans, a critical component of the lending ecosystem.
Suvendu Pati, Chief General Manager (CGM) of the Fintech Department at RBI, hinted at this innovative application during a recent discussion, emphasising the need for technological advancements in loan recovery mechanisms.
“I don't think we have innovated enough on the collection side,” Pati remarked.“Can the central bank digital currency, which acts as a cash substitute, be leveraged for micro-loan collections? We will soon engage with banks to generate fresh ideas in this space.”
This announcement comes amid India's ongoing CBDC pilot projects, which were launched in late 2022. The retail CBDC pilot has seen notable growth, with customer numbers rising from 1.3 million in June 2023 to 5 million by mid-2024.
Merchant adoption also increased, reaching 0.42 million. India is among 36 countries testing CBDCs in various forms, aiming to enhance financial inclusion and efficiency.
Parallelly, the RBI is making strides with its Unified Lending Interface (ULI), a UPI-like digital public infrastructure for lending.
Since its pilot debut in August 2023, ULI has facilitated 7.5 lakh loans amounting to Rs 38,000 crore, with a significant portion targeting micro, small, and medium enterprises (MSMEs).
The platform's plug-and-play architecture allows for seamless integration, enabling quick credit disbursal with minimal documentation.
Pati highlighted that ULI has already introduced 12 loan categories, including kisan credit cards, MSME loans, and personal loans.
By onboarding 36 lenders-ranging from state-owned banks to NBFCs-ULI aims to simplify credit access for diverse borrowers.
As India's fintech ecosystem evolves, integrating CBDC into micro-loan collections could mark a significant leap in reducing inefficiencies and ensuring timely repayments.
With RBI's proactive approach, the lending landscape is poised for transformative change, benefiting both borrowers and lenders.
(KNN Bureau)
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