Fintechs cheer RBI nod for accessing credit bureau

At a time when fintechs and new generation banks are increasingly offering digital lending solutions, the expanded availability of an individual's financial information to determine their creditworthiness can be a game changer. The possibilities of partnerships between e-commerce players and lenders will open up, enabling more financing options for purchases, said Lalit Mehta, co-founder & CEO, Decimal Technologies

- Banks and NBFCs inculcated technology to address the credit gap

- However, still several issues that delay loan disbursals

- IFC stated India's credit gap is at Rs25.8 lakh crore

- Current formal credit supply addresses only Rs10.9 trn for MSMEs

Mumbai: The RBI's decision to allow fintech to access credit bureau data has brought cheer among technology companies, with most of them offering last mile financing solutions for enterprises as well as retail customers. The move is being seen as a great enabler in expediting decision making by banks and NBFCs, while working with technology companies. RBI, as a regulator, has always adopted a progressive approach to ensure customers are able to access financial services seamlessly building towards the larger goal of financial inclusion. Apart from fintechs, the RBI's act has also been welcomed by Neo-Banking, LendTech, BankingTech, B2B SaaS in Supply Chain, SME Business Banking, FemTech and Embedded Finance companies.

The International Finance Corporation (IFC) has stated India's credit gap to be Rs25.8 trillion, while the formal credit supply addresses only Rs10.9 trillion worth of MSME financing needs. While Banks and NBFCs have inculcated technology to address the credit gap, there are still several issues that delay loan disbursals.

Lalit Mehta, co-founder & CEO, Decimal Technologies, says: "The Reserve Bank's recent release enabling entities categorized as 'Specified User' of Credit Information Companies (CICs) to tap into information with CICs continues to build upon that commitment, leading to further democratization of credit in the country. At a time when fintechs and neo-banks are increasingly offering digital lending solutions, the expanded availability of an individual's financial information to determine their creditworthiness can be a game changer. The possibilities of partnerships between e-commerce players and lenders will open up, enabling more financing options for purchases."

"We're looking forward to seeing how this new development impacts the digital lending space and increases the accessibility of credit to the traditionally underserved Indians," Mehta added.

Vinay Bagri, co-founder & CEO, Niyo, neo-banking fintech, says "It's a very progressive move by RBI. It significantly helps customers because fintechs, like us, are building innovative products to solve for consumer credit and direct access to bureau along with alternate data will further enhance the capabilities of fintechs to innovate and simplify credit offerings."

Gaurav Chopra, founder & CEO, IndiaLends, a marketplace for credit products (personal loans, credit cards), says: "At the outset, we interpret the notification to be a positive step for credible players in the market."

According to Chopra, "We're carefully reviewing the notification along with our partner bureaus, and as a responsible and customer centric service provider, we'll like to comment on the matter once there's absolute clarity on the notification's impact for all stakeholders, including our customers."

Fintech companies feel that the RBI's initiative to permit them to access credit information is in the right direction.

Citing the reason behind it they say that fintechs will continue to play an important role in financial inclusion of the masses and to provide Fintechs the credit information will help in quicker and better credit decisions.

Many of the fintechs have partnership with or funding from banks for origination of credit-based accounts.

"With the access to data for Fintechs during origination, banks will be able to take more informed decisions on underwriting the credit. It will also be useful if credit bureaus take inputs from Fintechs on other data parameters captured in their processes so as to evolve newer models of generating credit scores," Rajesh Mirjankar, MD & CEO, Kiya.ai, a bankingtech and regtech company.

The RBI move will help Fintech's and other service providers (who facilitate credit within their ecosystem in partnership with banks/NBFCs).

"This will enable faster turnaround of credit requests especially for small ticket loans/BNPL where lending is purely based on a certain criterion with no / limited manual intervention," said Rohit Agrawal, CEO, Mcapital–lending arm of Mswipe (one of India's largest financial services platform for SMEs) SME lender.

Bizongo, a B2B ecommerce and supply chain enablement platform for made-order-goods, says the move will fuel the growth for supply chain financing in India.