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The Reserve Bank Innovation Hub (RBIH), in association with the RBI has taken up the pilot project for end-to-end digitalisation of Kisan Credit Card (KCC) lending. The project would entail automation of various processes within banks and integration of their systems with the service providers. The proposed digitalisation of the KCC lending process will make it more efficient, reduce costs for borrowers and reduce TAT significantly.

As per the RBI, the pilot will commence in September 2022 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 state governments. Based on the learnings from the pilot, it will be expanded to other districts in these two states and gradually across the country.

In India, rural credit is related to inclusive economic growth, as it caters to the requirements of agriculture and allied activities, ancillary industries, small businesses, etc. Currently, getting finance is a tedious process that requires customers to visit a bank branch in-person, along with the proof of land ownership and other documents. The customers also often need to visit the bank branch multiple times. Hence, the Turnaround Time (TAT) from loan application to disbursement is high, ranging from two to four weeks.

Considering the challenges associated with rural finance in India, digitalisation of various aspects of rural finance is an important objective of RBI’s Fintech initiatives. The pilot project on digitalisation 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, thus transforming rural credit delivery system of the country.