RBI's Frictionless Credit Initiative has reduced customer acquisition costs for financial institutions by up to 70 percent. Besides, borrowers are also able to save up to 6 percent of their loan amount. This information was given by a senior RBI official.

The pilot project was launched in April this year in Tamil Nadu and Madhya Pradesh with all-digital KCC lending developed by RBI Innovation Hub on a public tech platform. From August 17 this year, it was extended to Maharashtra, Uttar Pradesh, Karnataka, and Gujarat (dairy producers).

RBI Executive Director and Head of Fintech Department Ajay Kumar Choudhary said the pilot launch of the public tech platform for frictionless credit has helped lenders reduce 70 percent operational costs. At the same time, farmers are getting help in saving 6 percent of their loan amount.

Further said that we have a good opportunity to save costs. Earlier, it used to take six to eight weeks for farmers to take loans, but now it has come down to zero. Let us tell you that this platform has been prepared by RBI Innovation, which is a subsidiary of the central bank.

The RBI had on April 17 launched a pilot project in Madhya Pradesh and Tamil Nadu for pure retail products such as Kisan Credit Card loans, dairy loans, MSME loans, personal loans, and home loans up to Rs 1.6 lakh per borrower.