All About Unified Lending Interface That RBI Is Planning To Launch --Will It Be Similar To UPI?

New Delhi: The Reserve Bank has announced that it will launch Unified Lending Interface (ULI), a platform to ensure a smooth credit flow, particularly for smaller and rural borrowers. According to RBI Governor Shaktikanta Das, the ULI will revolutionize the financing landscape in India. The ULI is anticipated to be launched nationally in due course.

What is Unified Lending Interface?

Developed by the Reserve Bank Innovation Hub (RBIH), the ULI will enable the smooth and consent-based transfer of digital data, including land records of various states, from multiple data service providers to lenders. 

The central bank launched the pilot of a technology platform last year that allows for frictionless credit in two states. This will now be known as ULI.

ULI to cut the time taken for credit appraisal

The ULI will shorten the credit appraisal process, particularly for rural and smaller borrowers. To provide digital access to information from various sources, the ULI architecture features standardized and shared APIs for a 'plug and play' approach. This lessens the complexity of several technical interfaces and gives borrowers the benefit of smooth credit delivery and faster turnaround times without necessitating a lot of paperwork.

ULI to cater to large unmet demand for credit

The ULI is projected to provide a significant unmet demand for credit across several sectors, especially for agricultural and MSME borrowers, by digitizing access to the customer's financial and non-financial data that was previously stored in separate silos.

ULI to transform the lending space in India

The ULI is anticipated to be launched nationally in due course and is expected to revolutionize the lending landscape in India, much like UPI revolutionized the payments ecosystem, says Das.

Challenges with digital lending

There would be difficulties and potential trade-offs in actually implementing interoperability, Das believes. The application of common (international) technical standards can help overcome technological obstacles. Finalizing the governance structure or management framework would also be necessary for long-term viability.

How is ULI different from UPI?

Unified Payments Interface (UPI) is a real-time payment system launched by the National Payments Corporation of India (NPCI) in April 2016. Under the Reserve Bank's guidance, banks promoted the NPCI. It has played a significant role in the expansion of digital retail payments in India. Whereas, Unified Lending Interface is a platform designed to ensure a smooth flow of credit, especially for smaller and rural borrowers.

Das believes that India's journey towards digital infrastructure will take a dramatic turn with the introduction of the "new trinity" of JAM-UPI-ULI.