MC Explainer: What you should know about RBI’s Unified Lending Interface platform

The RBI Governor said that earlier the policymakers had a trinity of Jan Dhan-Aadhaar-Mobile, or JAM. Now the central bank olans to propose a new trinity.

Positioned as a platform to transform the lending space, the Reserve Bank of India (RBI) is currently running a pilot of Unified Lending Interface or ULI. It is being envisaged as a technological platform that aims to provide a friction-less credit by reducing turnaround time for evaluating loan applications, especially for rural and smaller borrowers.

RBI Governor Shaktikanta Das on August 26 said that the RBI expects ULI to transform the lending landscape. “Just like the Unified Payments Interface (UPI) changed the payments ecosystem, similarly we expect ULI to transform the lending landscape,” Das said at the Global Conference on DPI and Emerging Technologies in Bengaluru.

Here’s an explainer about this platform.

Unified Lending Interface is a digital platform which is expected to smoothen the lending processes. The platform is aimed at catering to a large unmet demand for credit across various sectors, particularly for agricultural and medium small and micro enterprises (MSME) borrowers.

In other words, the platform is expected to reduce the turnaround time or TAT for processing and sanctioning loans, while shrinking the complexities for the parties involved in the process i.e. lenders and borrowers.

The platform will ease the flow of information required by a lender for processing a loan. The objective of ULI is to facilitate seamless flow of digital information not limited to only the financial parameters but also include details such as land records from multiple data providers to the lenders. By doing so, it is thought that the time taken for credit appraisal should reasonably reduce, especially for rural and smaller borrowers.

Alongside, the architecture is designed for a plug and play approach to enable quicker access to information from diverse sources. The platform will have common and standardised application programming interfaces (APIs) to ensure access to information from diverse sources.

The RBI had in August 2023 launched a frictionless credit platform for banks. The platform was aimed at easing the lending process for banks to lend in a few seconds to borrowers. The frictionless credit platform has been renamed as ULI and will now include banks and non-bank lenders like fintechs, NBFCs.

Das said that currently ULI is working in the pilot stage and will be available nationally soon. “The pilot for ULI was launched last year by the RBI to enable frictionless credit. And based on the experience of the pilot, RBI will decide to launch ULI nationwide,” Das said.

The RBI Governor said that earlier the policymakers had a trinity of Jan Dhan-Aadhaar-Mobile, or JAM. Now the central bank loans to further add layers to this trinity.

“New trinity -- JAM, UPI (Unified Payments Interface) and ULI, Central Bank Digital Currency (CBDC) to be rolled out gradually, is a revolutionary step in India’s Digital Public Infrastructure (DPI) journey,” Das said.