In order to enhance the unbanked, Telangana, India, has partnered with Cognito Technologies, a UK-based startup, to offer credit ratings to the population.
Speaking of the initiative, the co-founder of Cognito technologies, Murali Muhan Duvvuru said that:
"In phase 1, the entire process of disbursement of loans and repayments will be recorded on the Blockchain registries using smart contracts.After this, the individual credit rating will be derived from the transactions recorded and filed on Blockchain and the persons will be made aware of their credit score. "
Cognito Technologies to create the office in India
Following the agreement, Cognito Technologies is ready to set up an office in Hyderabad, India, in January and employ 15 staff members. It will work with Sthree Nidhi Credit Cooperative Federation Ltd, a government branch offering credits at affordable prices to self-help groups in the country.
According to Duvvuru, so how is Sthree Nidhi already has a working digital system, so they will only need to integrate the blockchain under that technology to help find an effective way to establish a person's credit history.
Pilot project to include 10,000 members of the self-help group
The pilot project will bring together 10,000 members of various self-help groups in the country, but transactions will begin to be recorded in the April blockchain of this year. This phase should last from two to three months, after which the interested parties will decide whether to increase it or not.
As with Duvvuru, even those with a good credit score can benefit from the project as they can now leverage their credit ratings to access cheaper loans they would have obtained from the banks.
Speaking about the project and its implementation, Jayesh Ranjan, the chief secretary of Telangana IT and industries, stated that:
"In the case of the SHGs, the institutional framework has been developed very carefully through two decades of hard work in Telangana.The credibility of this structure is very strong and therefore many deliveries such as loans and welfare schemes take place through this channel. a fraud or a series fraud did not occur in Telangana, the possibility of weakening the system due to some unscrupulous people who take advantage of it is always present and can affect the credibility of the system.Therefore, Blockchain is the most appropriate tool to implement here. "