FinMin, RBI meet today to fast-track Unified Lending Interface for MSME credit access

The time taken to verify documents of properties and other assets will be reduced considerably

To streamline credit access to micro, small and medium enterprises (MSMEs), the finance ministry and the Reserve Bank of India (RBI) will hold a high-level meeting on June 23 to review the progress of the Unified Lending Interface (ULI).

Finance secretary Ajay Seth and RBI deputy governor T Rabi Sankar, who co-chairs the platform’s oversight, are scheduled to participate in the meeting, a government source said.

The need to fast-track ULI comes amid persistent credit bottlenecks for MSMEs, which account for nearly 30 percent of India’s GDP but continue to face delays and rejections due to lack of collateral and complex documentation.

The meeting will explore how ULI can be scaled up by adding more information to help banks and lenders make quicker and better-informed loan decisions, the source told Moneycontrol.

Officials are also expected to discuss the nationwide rollout of the platform and assess whether more types of data and practical lending use-cases can be added to the system.

Some of the key data sources already linked to the ULI platform include digital land records from state governments, GST returns that reflect business income and milk collection data from cooperatives to assess earnings of dairy farmers.

The platform also uses satellite imagery to evaluate land and property and can instantly verify Aadhaar and PAN details, check bank accounts, and access documents stored in DigiLocker.

It also pulls in property-related records to assist in home loan decisions and connects to government-backed credit guarantee schemes for small businesses.

ULI is being developed as a digital public infrastructure to expedite and simplify the loan disbursal process for MSMEs by allowing lenders to verify key documents and borrower credentials in real time.

It integrates multiple data sources, including land records, audited financials, and GST filings, into a single interface accessible to banks and non-bank lenders.

“The Unified Lending Interface will help MSMEs get credit faster from banks and other lending institutions. The time taken to verify documents of properties and other assets will be reduced considerably, or even made real-time,” said Rakesh Chhabra, vice president, Federation of Indian Micro and Small & Medium Enterprises (FISME).

“It can become more beneficial in the coming time when all audited balance sheets and other relevant documents required by bankers are also uploaded on the portal.”

The push to fast-track the ULI also aligns with the government’s broader vision for digital lending and inclusive fintech growth.

“On the lines of UPI, we are now moving towards a Unified Lending Interface for digital lending,” finance minister Nirmala Sitharaman said at the Digital Payment Awards ceremony in New Delhi on June 18. She had emphasised the importance of rural markets in India’s digital finance journey, saying, “Every fintech should view rural ground as an opportunity towards a new market as demand is reviving and sustaining there.”

The minister said future finance would be phygital – physical and digital, adding  India’s fintech market is projected to reach $400 billion by the FY29, growing at 30 percent annually.

Closing MSME credit gap

The RBI launched the pilot version of ULI, then known as the Public Tech Platform for Frictionless Credit, in August 2023. It was formally announced as ULI by RBI governor Shaktikanta Das at the RBI@90 Global Conference in Bengaluru on August 26, 2024.

“The new trinity of JAM-UPI-ULI will be a revolutionary step forward in India’s digital infrastructure journey,” Das had said, adding just as UPI transformed the payments landscape, ULI would transform credit delivery.

According to Dharmender Jhamb, partner at Grant Thornton Bharat LLP, the platform is important for small borrowers who often lack assets or documentation.

“Unified Lending Interface will bring together multiple data sets for lenders to make informed lending decisions, especially for the underserved borrower segments, which do not have collaterals or assets,” he told Moneycontrol.

“This will be truly transformational and will help banks, NBFCs, and lending apps address the MSME credit gap, especially for women MSMEs. ULI use cases include cattle financing and more data sets are gradually being added to expand its utility across loan categories.”

Data backbone

The ULI has been conceptualised jointly by the RBI and its wholly owned subsidiary, the Reserve Bank Innovation Hub (RBIH). It is designed as a “plug-and-play” model that allows lenders to connect through standardised application programming interfaces (APIs), without the need for multiple individual integrations.

The platform also enables end-to-end digitalisation of Kisan Credit Card (KCC) loans and cattle financing, with real-time integration of data from milk federations and cooperative societies, aimed at reaching 120 million farmers and 80 million dairy households respectively.