Beginning this month, the Reserve Bank of India will oversee pilot programmes for the full digitalization of Kisan Credit Card (KCC) financing in a few selected Madhya Pradesh and Tamil Nadu regions. By lowering fees for borrowers and shortening turnaround times, the digitalization intends to increase the efficiency of KCC-based lending and increase loan availability to rural areas.
The pilot is being created by the Reserve Bank Innovation Hub (RBIH), according to a statement from RBI . While Federal Bank is the partner bank in Tamil Nadu, Union Bank of India is the partner bank in Madhya Pradesh. The pilot projects will be actively managed in collaboration with state governments.
The pilot project would involve integrating banks’ systems with those of the service providers and automating a number of operations within banks. According to RBI, the objective is to gradually digitalize KCC lending across the country and to additional districts in these two states based on the lessons learned during the pilot.
A variety of financial services are provided to clients in that industry at various income levels under the umbrella of rural finance. Rural credit is directly linked to inclusive economic growth in a country like India since it supports small enterprises, ancillary industries, agriculture, and other associated industries. Customers must currently visit a bank branch in person with documentation proving their ownership of the land in order to obtain such financing. The customer might need to make repeated trips to the bank branch. According to RBI, the turnaround time between loan application and disbursement has also been quite long, averaging two to four weeks.