GST Notification on Public Tech Platform for Frictionless Credit

Notification No. 06 dated 22nd?Feb 2024 is issued to notify “Public Tech Platform for Frictionless Credit” as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Central Goods and Services Tax Act, 2017.

Section 158A. Consent based sharing of information furnished by taxable person

(1) Notwithstanding anything contained in sections 133, 152 and 158, the following details furnished by a registered person may, subject to the provisions of subsection (2), and on the

recommendations of the Council, be shared by the common portal with such other systems as may be notified by the Government, in such manner and subject to such conditions as may be prescribed, namely:

1. particulars furnished in the application for registration under section 25 or in the return filed under section 39 or under section 44;
2. the particulars uploaded on the common portal for preparation of invoice, the details of outward supplies furnished under section 37 and the particulars uploaded on the common portal for generation of documents under section 68;
3. such other details as may be prescribed.

(2) For the purposes of sharing details under sub-section (1), the consent shall be obtained, of

1. the supplier, in respect of details furnished under clauses (a), (b) and (c) of sub-section (1); and
2. the recipient, in respect of details furnished under clause (b) of sub-section (1), and under clause (c) of sub-section (1) only where such details include identity information of the recipient,

in such form and manner as may be prescribed.

(3) Notwithstanding anything contained in any law for the time being in force, no action shall lie against the Government or the common portal with respect to any liability arising

consequent to information shared under this section and there shall be no impact on the liability to pay tax on the relevant supply or as per the relevant return.

Notification No. 06 dated 22nd?Feb 2024 has been issued to notify “Public Tech Platform for Frictionless Credit” as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Central Goods and Services Tax Act, 2017.

What is Public Tech Platform for Frictionless Credit?

The Reserve Bank of India (RBI) has initiated a pilot programme aimed at evaluating the feasibility of a 'Public Tech Platform for Frictionless Credit', seeking to facilitate seamless and efficient credit delivery by lenders for Credit Appraisal, and therefore boosting Financial Inclusion in India.

Frictionless credit is a borrowing approach that seeks to streamline the lending process for consumers. Unlike the traditional credit systems, where individuals need to go through extensive paperwork, credit checks, and lengthy approval procedures, frictionless credit promises a smoother and faster experience.

The initiative comes as part of RBI's developmental and regulatory policies and was introduced following the Monetary Policy Committee (MPC) meeting in August 2023.

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Public Tech Platform for Frictionless Credit is developed by the Reserve Bank Innovation Hub (RBIH). It is an end-to-end digital platform that will have an open architecture, open Application Programming Interfaces (APIs), and standards to which all banks can connect in a "Plug and Play" Model.

The public tech platform seeks to make this process seamless by providing all the required information in one place to facilitate credit.

Process

The process of delivering credit through digital means involves Credit Appraisal, which evaluates the borrower's ability to repay the loan and adhere to the credit agreement.

This process rests on three pillars:

• Adverse selection (information asymmetry between borrowers and lenders)
• Exposure risk measurement
• Default risk assessment.

Key Data Sources:

The platform would integrate data from central and state governments, Account Aggregators (AA), banks, credit information companies, and digital identity authorities. This consolidation would eliminate hindrances and streamline rule-based lending processes.

Scope and Coverage:

Diverse Loan Types:?

The platform's scope encompasses digital loans beyond KCC (Kisan Credit Card), including dairy loans, MSME loans without collateral, personal loans, and home loans.

Data Integration:?

It will link with various services like Aadhar e-KYC, Aadhar e-signing, land records, satellite data, PAN validation, transliteration, account aggregation by account aggregators (AAs), and more.

What are the Benefits and Outcomes?

Enhanced Credit Portfolio Management:

The platform's data consolidation will enable improved credit risk assessment and efficient credit portfolio management.

Improved Access to Credit:

Access to accurate information supports informed and swift credit assessments. This expansion of credit availability benefits borrowers by lowering the cost of capital access.

Reduced Operational Costs:

The platform addresses operational challenges such as multiple visits and documentation requirements, leading to cost reduction for both lenders and borrowers.

RBI’s survey indicated that processing of farm loans took two to four weeks and cost about 6% of the loan’s total value.

Efficiency and Scalability:

The platform's streamlined processes lead to quicker disbursement and scalability, resulting in a more efficient credit ecosystem.