State-run lenders plan cloud-based platform for fintech connect

Representative Image (Illustration by Suneesh K.)

Public sector lenders, including the State Bank of India, will jointly set up a unified cloud-based digital platform to connect with fintech companies and source loans through them on a revenue-sharing basis, reported the Economic Times, citing people aware of the matter.

Under the model, account aggregators and third-party application platform interface (API) will be used by fintech companies to carry out all first credit checks. The completed loan application will then be uploaded onto this electronic portal. Individual banks may access these loan requests and approve or deny them in accordance with their own internal credit risk criteria while paying a commission or fee to the fintech company that submitted the request.

The framework will enable state-run banks to access the broad network of fintech companies' resources, lowering their own costs associated with obtaining loans and making ad hoc investments in expensive platforms or technology.

"The idea is that the fintech firms will onboard large corporate and their suppliers or dealers for supply chain finance (SCF) business," a senior bank executive was reported as saying by ET.