The data required for credit appraisal is currently dispersed across various entities, including governments, banks, account aggregators, and credit information companies. The Unified Lending Interface (ULI) will streamline digital access to information from these diverse sources, significantly reducing the time needed for credit appraisal, especially for small and rural borrowers.
Following the groundbreaking success of the Unified Payments Interface (UPI) in the retail payments sector, Reserve Bank of India (RBI) Governor Shaktikanta Das announced on Monday the forthcoming launch of the Unified Lending Interface (ULI). This new platform is set to revolutionize the lending ecosystem in the country.
What is ULI?
ULI is a digital public infrastructure (DPI) platform for credit, developed by the Reserve Bank Innovation Hub (RBIH). Its goal is to facilitate a seamless, consent-based flow of digital information, including land records from various states, from multiple data service providers to lenders.
Last year, the RBI launched a pilot of a technology platform designed to enable frictionless credit. This platform will now be officially known as ULI.
How does ULI help?
ULI is designed to meet the substantial unmet demand for credit across various sectors, particularly for agricultural and micro, small, and medium enterprises (MSME) borrowers. By digitizing access to both financial and non-financial data, which currently reside in different silos, ULI will shorten the time required for credit appraisal. This is especially beneficial for small and rural borrowers, as it allows for seamless credit delivery and quicker turnaround times without the need for extensive documentation.
What are the current challenges with digital lending?
Presently, the data needed for credit appraisal is scattered across multiple entities, such as governments, banks, account aggregators, and credit information companies. These silos create barriers to frictionless and timely digital credit delivery.
ULI addresses this issue through an architecture featuring standardized application programming interfaces (APIs) that facilitate a ‘plug and play’ approach. This simplifies digital access to information from various sources and reduces the complexity of integrating multiple technical systems.
Is ULI the next big thing after UPI?
RBI Governor Das believes that ULI will have a transformative impact on India’s lending landscape, similar to what UPI has achieved for payments. He referred to the combination of JAM (Jan Dhan-Aadhaar-Mobile), UPI, and ULI as the “new trinity” that will drive India’s digital infrastructure forward.
The JAM initiative links Jan Dhan accounts, mobile numbers, and Aadhaar cards to prevent the leakage of government subsidies.
What is UPI and where does it stand now?
Launched in 2016, UPI is an instant real-time payment system developed by the National Payments Corporation of India Limited (NPCIL). It allows users to transfer money between multiple bank accounts in real-time. UPI has been NPCIL’s most successful product, expanding to countries like France, Singapore, Abu Dhabi, Sri Lanka, Mauritius, Nepal, and Bhutan. Over the past three months, UPI transactions have consistently surpassed the Rs 20 lakh crore mark, with totals of Rs 20.64 lakh crore in July, Rs 20.07 lakh crore in June, and Rs 20.44 lakh crore in May.
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