The Reserve Bank of India (RBI) has nudged State governments to plug into two of its flagship digital rails. Governor Sanjay Malhotra on Tuesday asked States to onboard onto the Unified Lending Interface (ULI) and to use Programmable Central Bank Digital Currency (P-CBDC) to deliver Direct Benefit Transfers (DBT).
Malhotra made the call while inaugurating the 36th Conference of State Finance Secretaries at the RBI in Mumbai on October 27, 2026. The conference was attended by finance secretaries from 27 States and three Union Territories, along with senior officials of the Union Ministry of Finance, the Controller General of Accounts and the Comptroller and Auditor General of India.
Why ULI and P-CBDC matter for States
ULI is the RBI-backed platform that lets lenders pull consent-based financial and non-financial data from multiple sources, enabling end-to-end digital credit with faster appraisal. For States, plugging their land records, agriculture and other databases into ULI can widen access to formal credit for farmers, MSMEs and other borrowers in their jurisdictions.
Programmable CBDC, meanwhile, allows conditions to be built into the digital rupee itself, so that funds can be locked to a specific purpose, beneficiary or time window. Used for DBT, it gives governments a way to make sure welfare money reaches the intended recipient and is spent on its intended use, reducing leakages.
The push is not new. At the post-policy press conference on August 5, 2026, Deputy Governor Rohit Jain had said several State governments were showing interest in using CBDC and ULI for their schemes, and that the central bank was in regular dialogue with them to deepen adoption.
Fiscal discipline in focus
The conference was themed ‘Role of Quality of Expenditure, Effective Cash and Prudent Debt Management in Enhancing States’ Fiscal Sustainability’. Malhotra stressed that the quality of spending is central to the long-term fiscal health of States, and urged them to follow prudent borrowing strategies and efficient cash management practices. He also advised States to make effective use of the State Level Bankers’ Committee (SLBC) forum.
The Governor released a booklet, ‘Compendium on Cash and Debt Management for State Governments’, which sets out key concepts, operational processes and good practices in cash and debt management in an accessible format.
The meeting also reviewed market borrowings by States, short-term financial accommodation extended to States by the RBI, and the adoption of a Benchmark Issuance Strategy for State borrowings.
What it means for BFSI
Wider State participation in ULI could give banks and NBFCs richer, verified data for underwriting, particularly in agriculture and small-ticket lending. A move to P-CBDC for DBT would, in turn, expand real-world use of the e-rupee beyond pilots and bring more banks into programmable payment flows. The call comes as State borrowing costs rise amid tight liquidity, making the RBI’s message on prudent debt management especially timely.
