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Digital KYC: Digital KYC, blockchain-based credit solutions are part of RBI’s fifth innovation sandbox
The Reserve Bank of India has selected five ideas in this regard blockchain-based lendingasset management and Digital KYC for its fifth sandbox cohort, the central bank said on Friday. These included proposals from two major fintech startupsSignzy and Epifi.
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Peak XV and Alpha Wave-backed Epifi will work on a video KYC solution for non-resident Indians looking to open bank accounts in India. The Bengaluru-based startup is looking to make such account opening digital, seamless and fast by eliminating physical documentation processes.
Signzy has suggested a new technology solution that can help consumers to do video KYC through the unattended route. Under the current rules, a consumer must do video KYC with an official from the regulated entity, such as a bank, on the other end of the call.
While these two startups will work to facilitate customer onboarding, Connectingdot Consultancy has been selected for a project on credit account monitoring. The solution will try to predict loan defaults by borrowers and suggest specific risk mitigation paths.
There is a lot of work going on to sign up customers for credit provision through digital means. The next generation of innovation is happening around monitoring these loan accounts.
Two other entities, invoice-based lending startup Finagg and nonprofit Indian Banks’ Digital Infrastructure Company (IBDIC), spearheaded by a consortium of 18 banks, will work on building blockchain-based lending solutions. IBDIC is working on building public digital infrastructures like UPI and Aadhaar, but with a focus on blockchain-based solutions.
Finagg will test a blockchain-based supply chain credit solution for sellers of large companies. The credits of these large companies can be converted into a digital token against which sellers can obtain financing from banks.
IBDIC is also working on a blockchain-based solution that will help small businesses, which are part of a company’s supply network, to obtain financing from lenders. This solution will help SMEs access credit, RBI She said.
“Blockchain-based deep-tier financing coupled with the utility of tokenization offers a more efficient and inclusive approach to SME finance, bridging the gap in access to credit and driving economic growth. There is global precedent from incumbent financial institutions and fintechs around tokenization and the value unlocked by tokenizing SME loan portfolios,” said Sharat Chandra, founder of EmpowerEdge Ventures, a startup enabler platform.