3 weeks ago
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday announced that the central bank is set to launch the Unified Lending Interface (ULI) nationwide soon, as it expects this platform to transform the lending sector in India much like the Unified Payments Interface (UPI) has transformed the payments ecosystem.
The pilot for ULI was launched last year by the RBI to enable frictionless credit. Based on the experience of the pilot, the RBI has decided to roll out ULI nationwide.
“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 Global Conference on Digital Public Infrastructure and Emerging Technologies.
According to Das, ULI facilitates the seamless and consent-based flow of digital information, including land records of various states, from multiple data service providers to lenders. This cuts down the time taken for credit appraisal, especially for smaller and rural borrowers.
Das further explained that the ULI architecture has common and standardised application programming interfaces (APIs), designed for a 'plug and play' approach to ensure digital access to information from diverse sources, thereby reducing the complexity of multiple technical integrations. As a result, it enables borrowers to benefit from the seamless delivery of credit and quicker turnaround times without requiring extensive documentation, he said.
“In sum, by digitising access to customers’ financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to the large unmet demand for credit across various sectors, particularly for agricultural and micro, small, and medium enterprises (MSMEs) borrowers,” Das added.
Speaking on central bank digital currency (CBDC), Das highlighted that there should not be any rush to roll out a system-wide CBDC before acquiring a comprehensive understanding of its impact on users, monetary policy, the financial system, and the economy.
“Such understanding would emerge from the generation of user data in pilots. 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 noted.
The RBI launched CBDC pilots in both retail and wholesale segments in 2022. The retail pilot currently has over 5 million users and 16 participating banks. “While the retail pilot started with the initial use case of payments, both the offline and programmability functionalities are currently being tested. The programmability feature of CBDC could serve as a key enabler for financial inclusion by ensuring the delivery of funds to the targeted user,” Das said.
Additionally, the governor emphasized that India’s flagship payments platform, UPI, has the potential to evolve into a cheaper and quicker alternative to the available channels of cross-border remittances. He suggested that a beginning could be made with small-value personal remittances as it can be quickly implemented.
