RBI to launch Unified Lending Interface, how it will change credit space in India?

RBI’s ULI: After the grand success of the Unified Payment Interface, the Reserve Bank of India is piloting another interface to revolutionise lending space through the Unified Lending Interface. In one of his addresses, RBI governor Shaktikanta Das said that the pilot of Unified Lending Interface will be launched nationwide soon and will be UPI on the credit side. The objective of coming up with ULI is to cut short the time of lending especially in rural areas to farmers and MSMEs.

According to Das, the RBI has last year started a tech platform for enabling frictionless credit. Das went on to clarify that the initiative is still in the pilot stage.

What is ULI?
Unified Lending Interface is similar to Unified Payment Interface. ULI will facilitate a seamless and consent-based flow of digital transformation. This will allow seamless and consent-based flow of digital transformation, including land records, and all data required to lenders from various platforms existing in silos. The ULI is also pushed forward with an objective to reduce the time taken for credit appraisal, especially for small borrowers belonging to rural India. The ULI is designed for a plug-and-play approach to allow quicker access for everyone.

According to Das, ULI improves digital access from diverse sources for lenders. “The ecosystem is based on the consent of potential borrowers and data privacy is protected," Das said.

The government launched the pilot phase of ULI targeting some key sectors such as agriculture, dairy, MSMEs, personal loans, etc. Das in his address seemed very bullish on ULI. According to him, ULI has the potential to transform India’s lending landscape, the way UPI, and JAM transformed India’s financial landscape of the country.

According to experts, the ULI initiative has the potential to address the unmet demand in rural India. By digitising access to both financial and non-financial information, ULI aims to streamline the borrowing process, reducing the time required for loan approvals and minimizing paperwork.