NEWS – Reserve bank of India will be launching Unified Lending Interface (ULI)

HIGHLIGHTS

• The Unified Lending Interface (ULI) is a technology platform developed by the Reserve Bank Innovation Hub, Bengaluru.
• Purpose: ULI aims to enable friction-less credit to farmers and MSME borrowers by facilitating the seamless flow of digitized financial and non-financial data.
• Strategy: Part of RBI’s digital public infrastructure initiative.

• Data Integration: ULI integrates customer data from multiple data service providers into a single platform.
• Consent-Based Flow: Facilitates consent-based access to information, including land records and financial data.
• Standardized APIs: Employs standardized Application Programming Interfaces (APIs) for a ‘plug and play’ approach, reducing technical complexities.
• Benefits:
  • Faster Credit Appraisal: Reduces time for credit approval, especially for those without credit history.
  • Ease of Access: Simplifies the documentation process for borrowers.
  • Enhanced Insights: Enables FinTechs to provide deeper customer insights.

Key Features

• Single Platform Access: ULI provides digital credit information via a single platform, making it easier for lenders to access borrower data.
• Data Sources: Utilizes various data sources such as government databases, satellite imagery, and milk cooperatives.
• Automated Decision-Making: Enables automated loan decision-making, reducing the time for loan sanction and disbursement.

Practical Application

• Example: A dairy farmer seeking a loan can have their cash flow, land ownership, and financial condition evaluated through ULI.
• Tenant Farmers: Facilitates credit for tenant farmers by programming end-use for agricultural inputs, bypassing the need for land titles.

How Will ULI Make Things Easier for Lenders?

• Centralized Data Access: Lenders gain access to diverse data silos through ULI, reducing the need for multiple integrations.
• Enhanced Visibility: Converts potential blind spots in borrower evaluation into visible data points for better business decisions.
• Streamlined Processes: Simplifies and speeds up the credit underwriting process, allowing for quick loan approvals.

How Did It Start?

• Initial Announcement: RBI announced the Public Tech Platform for Frictionless Credit on August 10, 2023, which was later branded as ULI.
• Pilot Project:
  • Kisan Credit Card (KCC): A pilot for digitalization of KCC loans under ₹1.6 lakh was initiated in September 2022 in select districts across India.
  • Results: The pilot showed positive results, enabling doorstep loan disbursement without paperwork.