very informative article on AA and data empowerment.In fact, it will decrease the repetitive administrative responsibilities and the employees will have more time ti focus on creative and rewarding job related activities. I think last year NITI AAYOG Also made a policy on data empowerment and protection.
We live in a data driven world. While on one hand , there is a move towards data based governance and decision making, on the other hand there is a concern about the "statistical vaccum "due to a number of national statistical bases getting eroded either through delays or data suppression.. There is a need for decentralized system of data collection process and states should build their own data bases. The states need to invest heavily in in both human and technical infrastructure with a built in quality control measure.
Dear Vandana, Thank you so much for your comment. You are spot on about flagging the utter neglect of our official statistical gathering system. High time it was bumped up in the list of national priorities. It is hurting policy formulation big time. Imagine the plight of RBI while it is readying its monetary policy. Akin to driving in zero visibility. A disaster is inevitable of you have to suffer out all the time. Best. Anil
Really exciting development Anil and these days I am keeping abreast of these very important developments, by catching up on your weekly newsletter. Thank you. Everything seems to be the perfect recipe for a dynamic GDP growth; just what the doctor ordered. I only wanted to know whether this easy availability of funds will also be a catalyst for a larger number of defaults in repayment of loans ?
Dear Gautam, thank you so much for your kind words. Much appreciated. About your worry on defaults it is possible. However experience, so far, with BNPL shows that there are no out of the ordinary defaults. Lower ticket loan borrowers are more conscious of protecting their credit history. Best. Anil
Very good piece and explained very well. Im seeing a very big opportunity. Look forward for another piece on what kind of business opportunity AA offer for intermediaries, banks and individuals and its role on India moving from $2 trillion to $5 trillion economy
Thank you for a comprehensive review on AA and its consequences to credit distribution. While I understand, AA as a consent layer shall help secure credit in a more effective manner for those that have the requisite data. Is there a way this could also work for the rural population/financially under served where cash is still dominant and data is almost absent?
Dear Nishad, thank you for reading and writing in. To your query that is the idea. I cited one possible play by monetising the data on wage payments under the MNREGA scheme to extend credit. We should watch this space closely. Best. Anil
Thank you Anil for the wonderful article. As mentioned legacy media underplayed it and I missed it completely. Without your newsletter, it would have caught me by surprise sometime later.
This got me thinking. Isn't it something of a CIBIL 2.0? In CIBIL only the banks were involved, now in addition to banks other financial institutions are getting involved in AA. Correct me if I'm wrong or missing something.
Hi Vivek, I believe it is not so. What CIBIL does is to track your credit history and rate it: good, bad, poor. What the AA will do is to take your personal encrypted data and share it with another entity--a bank in case the data is being used to access a loan from a bank. The CIBIL score will continue to be part of the Psychographics a bank will track before extending a loan.
Kishan, another reader, has shared a very nice thread below. It lays out the AA framework in greater detail.
Hope this helped. If not, please feel free to write in with your query.
This AA Innovation has immense possibilities.As usual, the mainstream media missed out on these developments.
The access to the credit for the poor households and MSME is very restricted.Micro- finance has been a major and remarkably successful innovation.But the interest rate of 24-36% they have been charging is exploitatively high.That too, default has been very low, when compare to other segments of the borrowers.
Hope, AA based lending will bring in efficiency in risk rating
Dear Ajit, Thank you for your comments. Agree with you absolutely. The potential is infinite. And since it is a tech inspired disruption it is unlikely to be derailed. Guess AA will inspire a favourable domino impact on the entire financial sector. Fingers crossed. Best. Anil
Dear Anil,
very informative article on AA and data empowerment.In fact, it will decrease the repetitive administrative responsibilities and the employees will have more time ti focus on creative and rewarding job related activities. I think last year NITI AAYOG Also made a policy on data empowerment and protection.
We live in a data driven world. While on one hand , there is a move towards data based governance and decision making, on the other hand there is a concern about the "statistical vaccum "due to a number of national statistical bases getting eroded either through delays or data suppression.. There is a need for decentralized system of data collection process and states should build their own data bases. The states need to invest heavily in in both human and technical infrastructure with a built in quality control measure.
Dear Vandana, Thank you so much for your comment. You are spot on about flagging the utter neglect of our official statistical gathering system. High time it was bumped up in the list of national priorities. It is hurting policy formulation big time. Imagine the plight of RBI while it is readying its monetary policy. Akin to driving in zero visibility. A disaster is inevitable of you have to suffer out all the time. Best. Anil
Really exciting development Anil and these days I am keeping abreast of these very important developments, by catching up on your weekly newsletter. Thank you. Everything seems to be the perfect recipe for a dynamic GDP growth; just what the doctor ordered. I only wanted to know whether this easy availability of funds will also be a catalyst for a larger number of defaults in repayment of loans ?
Dear Gautam, thank you so much for your kind words. Much appreciated. About your worry on defaults it is possible. However experience, so far, with BNPL shows that there are no out of the ordinary defaults. Lower ticket loan borrowers are more conscious of protecting their credit history. Best. Anil
Dear Anil,
Very good piece and explained very well. Im seeing a very big opportunity. Look forward for another piece on what kind of business opportunity AA offer for intermediaries, banks and individuals and its role on India moving from $2 trillion to $5 trillion economy
Dear Virendra, Thank you so much for your comments and and appreciation. Great suggestion. Will definitely explore the idea.
Best
Anil
Dear Sir,
Thank you for a comprehensive review on AA and its consequences to credit distribution. While I understand, AA as a consent layer shall help secure credit in a more effective manner for those that have the requisite data. Is there a way this could also work for the rural population/financially under served where cash is still dominant and data is almost absent?
Dear Nishad, thank you for reading and writing in. To your query that is the idea. I cited one possible play by monetising the data on wage payments under the MNREGA scheme to extend credit. We should watch this space closely. Best. Anil
Thank you Anil for the wonderful article. As mentioned legacy media underplayed it and I missed it completely. Without your newsletter, it would have caught me by surprise sometime later.
Waiting eagerly to see how this miracle pans out.
Thank you so much Vivek for the kind words. Means a lot to me. Much appreciated. Best. Anil
This got me thinking. Isn't it something of a CIBIL 2.0? In CIBIL only the banks were involved, now in addition to banks other financial institutions are getting involved in AA. Correct me if I'm wrong or missing something.
Hi Vivek, I believe it is not so. What CIBIL does is to track your credit history and rate it: good, bad, poor. What the AA will do is to take your personal encrypted data and share it with another entity--a bank in case the data is being used to access a loan from a bank. The CIBIL score will continue to be part of the Psychographics a bank will track before extending a loan.
Kishan, another reader, has shared a very nice thread below. It lays out the AA framework in greater detail.
Hope this helped. If not, please feel free to write in with your query.
Best
Anil
https://twitter.com/finbook_club/status/1433350827016540161
Thank you for this Kishan. Excellent thread.
I'm glad you liked it 🙏🏼
Thanks for the encouraging words.
This AA Innovation has immense possibilities.As usual, the mainstream media missed out on these developments.
The access to the credit for the poor households and MSME is very restricted.Micro- finance has been a major and remarkably successful innovation.But the interest rate of 24-36% they have been charging is exploitatively high.That too, default has been very low, when compare to other segments of the borrowers.
Hope, AA based lending will bring in efficiency in risk rating
Very nicely put and explained.
Ajit Verma
Show quoted text
Dear Ajit, Thank you for your comments. Agree with you absolutely. The potential is infinite. And since it is a tech inspired disruption it is unlikely to be derailed. Guess AA will inspire a favourable domino impact on the entire financial sector. Fingers crossed. Best. Anil