Aimed at enabling use of account aggregators and third-party application platform interface by fintech companies to carry out all first credit checks.
Public sector banks are set to establish a unified cloud-based digital platform to connect with fintech companies for the sourcing of loans. This is expected to be done on a revenue sharing basis. State Bank of India (SBI) is among the bunch of public sector leaders that will be part of this set up.
Going by a report, the new model will enable use of account aggregators and third-party application platform interface (API) by fintech companies to carry out all first credit checks. Loan applications duly filled will be uploaded onto this electronic portal, it added.
Fee to be paid to fintech co submitting requests
It has also been reported that banks in their individual capacity will be able to access these loan requests and approve or deny them in accordance with their own internal credit risk criteria. This will be duly done by paying a commission or fee to the fintech company that submits the request.
Significant about the new platform would be that it will aid state-run banking companies to gain access to the resources held by a vast network of fintech companies. Besides they will be able to lower their own costs associated with obtaining loans and making ad hoc investments in expensive platforms or technology, the report pointed out.
The new framework will most probably allow fintech companies to onboard large corporate and their suppliers and dealers for supply chain finance businesses. The new set up will be driven by the public sector lenders under PSB Alliance Ltd. The PSB Alliance Ltd has been floated in a bid to act as an intermediary for them.
SMB connect also in the pipeline
The next move in making the framework work effectively is to pick a technology service provider which will be assigned to develop and manage the new cloud-based platform.
Once the platform is ready, public sector banks are expected to connect their individual core banking systems with the proposed digital platform for payments and reporting.
Further, at a later stage, the upcoming digital platform will also look to link up with other small and medium business (SMB) account service companies, so as to assist banks in offering credit underwriting, transaction management, and other micro, small, and medium business (MSME) loan products.