The much-anticipated launch of the Unified Lending Interface (ULI) by the Reserve Bank of India (RBI) is set to revolutionize the credit access landscape for small and rural borrowers across the country. RBI Governor Shaktikanta Das announced on August 26 that the platform aims to provide “frictionless credit” to these underserved segments, following the success of the Unified Payments Interface (UPI) in transforming digital payments in India.
The ULI, currently in its pilot phase initiated last year in August, is designed to streamline the credit appraisal process and enhance efficiency. Governor Das indicated that the full-scale launch of ULI is imminent, drawing parallels to the significant impact UPI has had on the payments ecosystem.
Speaking at the RBI@90 Global Conference on Digital Public Infrastructure and Emerging Technologies, Governor Das expressed his vision for ULI in reshaping the lending sector. He compared the potential influence of ULI to the transformative role that UPI has played in revolutionizing digital payments in India.
The Unified Lending Interface (ULI) is a technological platform that facilitates a seamless flow of digital information between data service providers and lenders through a consent-based mechanism. This includes essential data such as land records from various states, which traditionally could delay credit approvals, especially for small and rural borrowers. By standardizing this information flow, ULI aims to simplify and expedite the credit application process, reducing paperwork and turnaround time for borrowers.
The architecture of ULI features a common and standardized application programming interface (API) designed for a ‘plug-and-play’ approach. This setup simplifies the integration process for lenders to access diverse data sources without complex technical adjustments, ensuring a quicker turnaround time for credit applications while minimizing documentation requirements.
Governor Das underscored the potential impact of ULI on addressing the unmet credit demand in sectors like agriculture and micro, small, and medium enterprises (MSMEs). By digitizing access to financial and non-financial data previously siloed, ULI aims to provide more inclusive and efficient credit solutions, particularly beneficial for borrowers in rural areas facing challenges in accessing timely credit.
The integration of ULI into India’s Digital Public Infrastructure (DPI) strategy, which includes initiatives like the JAM trinity—Jan Dhan Accounts, Aadhar, and Mobile Phones—aims to improve digital inclusion by leveraging existing frameworks. ULI’s alignment with these initiatives is expected to enhance its impact further by addressing the credit needs of underserved segments, building on the foundation laid by previous digital inclusion efforts.
Comparing ULI to the transformative impact of UPI in the payments ecosystem, Governor Das highlighted the platform’s potential to become a key component of India’s digital financial ecosystem. While UPI has reshaped the payment landscape, ULI is poised to revolutionize lending by offering a more efficient and user-friendly credit system to borrowers.
Governor Das reiterated the RBI’s commitment to strengthening the financial system through innovative policies and technologies, aiming to enhance the resilience and responsiveness of the sector. With ULI on the horizon, the future of credit access for small and rural borrowers in India looks promising, setting the stage for a new era of streamlined and efficient lending practices.