The Reserve Bank of India (RBI) Governor Shaktikanta Das recently announced the launch of the Unified Lending Interface (ULI) in the country. ULI is anticipated to profoundly emphasise the lending sector, akin to the transformative effect of the Unified Payments Interface (UPI) payments ecosystem.
Governor Das unveiled the interface at the Global Conference on “Digital Public Infrastructure and Emerging Technologies.” He emphasised that ULI will play a pivotal role in revolutionising credit delivery in India, mirroring the advancements brought by UPI. “The ‘new trinity’ of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey,” Das stated.
RBI has initially piloted the ULI last year to enable a seamless credit experience. Following the positive outcomes from the pilot, the central bank is now set to expand ULI’s reach across the country. This platform facilitates a frictionless and consent-based flow of digital information, including land records, from various data service providers to lenders. This streamlined process significantly reduces the time required for credit appraisal, especially benefiting smaller and rural borrowers.
Das emphasised the ULI architecture’s use of standardised APIs for a ‘plug and play’ approach, which facilitates digital access to various information sources. This innovation is projected to accelerate loan delivery while reducing the need for significant documentation, making credit more accessible and efficient.
ULI aspires to fulfil the significant unmet demand for credit, particularly among rural and MSME borrowers, by digitising previously fragmented financial and non-financial data. Das emphasised that this digital improvement is critical for catering to various sectors and promoting economic development.
In his speech, Das also discussed the Reserve Bank‘s approach to Central Bank Digital Currency (CBDC). He emphasised the importance of a measured and informed rollout of CBDC, highlighting the need for a thorough understanding of its impact on users, monetary policy, the financial system, and the broader economy. The RBI has been piloting CBDCs in retail and wholesale segments since 2022, with the pilot already involving over 5 million users and 16 participating banks.
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Das noted that while the initial use case for CBDC was payments, ongoing tests are exploring its offline and programmability features. The programmability aspect of CBDC is anticipated to be a key enabler of financial inclusion, ensuring targeted delivery of funds.
The introduction of ULI and advancements in CBDC represent significant strides in India’s digital financial infrastructure, promising to reshape the landscape of lending and payment systems for the future.
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