RBI’s Unified Lending Interface to redefine lending in India

The Reserve Bank of India’s (RBI) plans to launch a Unified Lending Interface (ULI) all across the country is aimed at transforming the lending sector in the same way as the Unified Payments Interface (UPI) has reorganised the payments culture.

At the Global Conference on Digital Public Infrastructure and Emerging Technologies in Bengaluru, RBI Governor Shaktikanta Das revealed India’s aim is to launch a ULI system in due course. This would give lenders consent-based digital access to financial and non-financial information of customers, including property-related data.

It is a step aimed at facilitating “frictionless credit”, Das said, adding that the its pilot of the concept was launched in 2023. 

“Continuing on this journey of digitalisation of banking services, last year we launched the pilot of a technology platform that enables frictionless credit. From now on, we propose to call it the ULI,” Das said at the conference.

The ULI system is meant to ensure a seamless process for borrowers, especially rural or smaller borrowers including farmers and those who own or run Micro, Small and Medium Enterprises (MSME). Right now, financial and non-financial data of customers have to be collected from different silos such as the central and state governments, besides banks and local bodies to process a loan. The launch of a ULI system will reduce the time and documentation formalities necessary for a credit appraisal.

The RBI Governor also stated that, along with JAM (short form of Jan Dhan, Aadhaar, and Mobile in banking jargon) and the UPI, the ULI scheme would form a “new trinity” that would define “India’s digital infrastructure journey”.

“Just like UPI transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India. The ‘new trinity’ of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey,” Das said.

At the event, Das highlighted the success of India’s UPI movement, too. “The current ecosystem of digital payments in India offers a bouquet of simple, safe, and secure options for instant or quick transfer of funds, both large and small value, for businesses and individuals,” he said.

The RBI Governor also focussed on the subject of the Central Bank Digital Currency (CBDC), too, at the conference.

“The actual introduction of CBDC can be phased in gradually. Undoubtedly, CBDC has the potential to underpin the payment systems of the future, both for domestic payments and cross-border payments,” Das said.