The Reserve Bank of India (RBI) is all set to float its ‘Unified Lending Interface’ (ULI) technology platform, which is expected to offer “frictionless credit” and will soon be available nationwide. On Monday, RBI Governor Shaktikanta Das, while speaking at the Global Conference on DPI and Emerging Technologies, said the central bank is expecting the ULI to transform the lending landscape.
In August of last year, the Reserve Bank of India (RBI) initiated a pilot project for a public technology platform designed to facilitate seamless credit transactions, as previously revealed. The primary goal is to streamline the lending procedure by decreasing expenses, expediting fund distribution, and enhancing scalability.
RBI Governor Das said just like UPI transformed the payments ecosystem, he expects that ULI will play a similar role in transforming the lending space in the country.
What is Unified Lending Interface?
Unified Lending Interface (ULI) is a digital platform designed to streamline lending processes, catering to a significant unmet credit demand across various sectors. The platform specifically targets agricultural and medium, small, and micro-enterprises (MSME) borrowers.
In light of the rapid advancements in digitalisation, India has deeply integrated the concept of digital public infrastructure. This strategy is motivating various financial institutions, such as banks, NBFCs, fintech companies, and startups, to create and provide innovative solutions in payment services, credit offerings, and other financial transactions.
Regarding digital credit disbursement, the necessary data for credit evaluations is scattered among various entities such as central and state governments, account aggregators, banks, credit information bureaus, and digital identity authorities. Despite the importance of these datasets, they are stored in separate systems, causing obstacles to the smooth and efficient implementation of rule-based lending processes.
ULI will cut down the time taken for credit appraisal, especially for smaller and rural borrowers.
“In sum, by digitising access to customer’s financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers,” Das emphasised.
“The ‘new trinity’ of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey,” he stated.
The JAM (Jan Dhan, Aadhar and Mobile) trinity is a tool used by the government to transfer cash benefits directly to the bank account of the beneficiary.
Das highlighted that the digitisation of customer financial and non-financial data through the Unified Lending Interface (ULI) system is anticipated to address a significant unmet need for credit in various sectors, especially for agricultural and MSME borrowers.
The ULI architecture is characterised by its utilisation of common and standardized APIs, which are tailored for a ‘plug and play’ methodology. This design allows for effortless digital retrieval of information from various sources, thereby simplifying the intricate process of multiple technical integrations. Consequently, borrowers are poised to experience enhanced credit accessibility and swifter processing times, all achieved without the necessity for extensive paperwork.
How will it help?
“By standardising data-sharing via APIs (application programming interfaces), ULI will boost both the accessibility and efficiency of credit, especially for underserved market segments. This initiative intends to eliminate barriers for small borrowers and emerging enterprises, creating a more inclusive financial ecosystem. For fintechs, ULI provides an opportunity to leverage streamlined data access and spur greater innovation while expanding their reach. As ULI gains greater popularity, it will create new standards in digital lending, encouraging competition and reshaping India’s lending landscape to make credit more transparent, accessible and equitable for all borrowers,” said Gaurav Jalan, Founder & CEO, mPokket.
“The ULI initiative is expected to transform lending in the same way that UPI transformed payments. It will increase penetration and create new models, providing easier access to credit while also reducing the cost of acquisition for lending companies, leading to innovative digital lending models. The ULI platform will further enhance the public digital infrastructure, which includes other platforms like UPI, Jan Dhan, Aadhaar, etc. We believe that India is creating a world-class digital infrastructure that will have a multiplier effect on the Indian economy, primarily driven by services and solutions built on it,” said Shravan Shetty, Managing Director, Primus Partners.