“A nationwide launch of the Unified Lending Interface (ULI) will happen in due course. Similar to Unified Payment Interface (UPI), which has revolutionized the retail payment system in the country, ULI will transform the lending landscape,” said Shaktikanta Das, Reserve Bank of India (RBI) Governor on Monday.
RBI Launching ULI Pilot
The RBI launched a pilot project for a public tech platform for frictionless credit during August last year.
As per this announcement, the pilot project is aimed to bring about efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability.
This Monday, the RBI Governor proposed to call the tech platform for frictionless credit as Unified Lending Interface (ULI).
According to him, as we can see how UPI transformed the payments ecosystem, he expects that ULI will play a similar role in transforming the lending space in the country.
When it comes to India, the country 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, with rapid progress in digitalisation.
How Does This Help?
The data required for credit appraisal are available with different entities such as Central and State governments, account aggregators, banks, credit information companies and digital identity authorities which helps in efficient digital credit delivery.
But, we cannot deny that these data sets are in separate systems hence creating a hindrance in frictionless and timely delivery of rule-based lending.
Here, the ULI platform will come to the rescue as it will facilitate a seamless and consent-based flow of digital information, including land records of various states, from multiple data service providers to lenders, as informed by the RBI Governor.
Besides this, this program will help cut down the time taken for credit appraisal, especially for smaller and rural borrowers.
This ULI architecture has common and standardized APIs (Application Programming Interface) which are especially designed for a ‘plug and play’ approach to ensure digital access to information from diverse sources, the RBI governor noted.
In addition to this, this platform also helps in reducing the complexity of multiple technical integrations, further enabling the borrowers to get the benefit of seamless delivery of credit, and quicker turnaround time without requiring extensive documentation.
As we already know that the Unified Payments Interface or UPI is a real-time payment system launched in India in April 2016 by the National Payments Corporation of India (NPCI).
This system empowers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
