In order to empower the unbanked, Telangana, India, has collaborated with Cognito Technologies, a UK-based startup, to offer credit ratings to the population.

Speaking about the initiative, the co-founder of Cognito technologies, Murali Muhan Duvvuru said that:

“In phase-1, the entire process of loan disbursement and repayments will be recorded on Blockchain ledgers using smart contracts. Following which, individual credit rating will be derived from the transactions recorded and stored on Blockchain and the individuals will then be made aware of their credit score.”

Following the deal, Cognito Technologies is ready to set up an office in Hyderabad, India this January and employ 15 staff members. It will work with Sthree Nidhi Credit Cooperative Federation Ltd, a government branch that gives affordable credit to members of self-help groups in the country.

According to Duvvuru, as it stands Sthree Nidhi already has a digital system working, so they will only need to integrate blockchain under that technology to help come up with an effective system to establish an individual’s credit history.

The pilot project will bring together 10,000 members from various self-help groups in the country, but the transactions will start being recorded in the blockchain come April this year. This phase is expected to run for about two to three months, after which stakeholders will decide whether to scale it up or not.

As per Duvvuru, those with a good credit score can benefit from the project too since they can now leverage their rating to access cheaper loans that they would have got from banks.

Speaking about the project and its implementation, Jayesh Ranjan, the principal secretary of Telangana IT and industries said that:

“In the case of 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 hence lots of deliveries such as loans and welfare schemes happen through this channel. While a serious scam or fraud has not taken place in Telangana, the possibility of system weakening due to some unscrupulous people taking advantage is always there and can affect the credibility of the system. Therefore, Blockchain is the most appropriate tool to be implemented here.”

Similar to Notcoin - Blum - Airdrops In 2024

origin »

260 +