Context: The Reserve Bank of India (RBI) Governor has informed that a nationwide launch of the Unified Lending Interface (ULI) will transform the lending landscape.
What are Issues with Credit Delivery?
- For digital credit delivery, the data required for credit appraisal are available with different entities like Central and State governments, account aggregators, banks, credit information companies and digital identity authorities.
- However, these data sets are in separate systems, creating hindrance in frictionless and timely delivery of rule-based lending.
Unified Lending Interface (ULI)
- Seamless Flow of Information: The ULI platform will facilitate a seamless and consent-based flow of digital information, including land records of various states, from multiple data service providers to lenders. It will cut down the time taken for credit appraisal, especially for smaller and rural borrowers.
- Quicker Delivery of Credit: The platform will reduce the complexity of multiple technical integrations, and will enable borrowers to get the benefit of seamless delivery of credit, and quicker turnaround time without requiring extensive documentation.
- Standardised API: The ULI architecture has common and standardised APIs (Application Programming Interface), designed for a ‘plug and play’ approach to ensure digital access to information from diverse sources.
- Enhance Financial Inclusion: By digitising access to customer’s financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers.
- Further Digitalisation of Economy: With rapid progress in digitalisation, India has embraced the concept of digital public infrastructure which encourages banks, NBFCs, fintech companies and start-ups to create and provide innovative solutions in payments, credit, and other financial activities. The ‘new trinity’ of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey.