Soon, taking a loan for your small business, buying equipment for farming, or covering other essential needs will be faster and easier. The Reserve Bank of India (RBI) plans to launch the Unified Lending Interface (ULI) on a national level, aiming to transform the lending process across India. Initially introduced as a pilot project in 2023, ULI will soon be available for wider use, according to RBI Governor Shaktikanta Das.
Much like the Unified Payments Interface (UPI) revolutionised payments, ULI aims to do the same for lending, making it quicker and simpler for you to access credit when you need it most.
What is Unified Lending Interface?
ULI is a digital platform designed to make lending processes more efficient. It’s particularly focused on helping those who may have previously struggled to access credit, such as farmers and small business owners. ULI addresses the unmet demand for loans across various sectors, including agriculture and Micro, Small, and Medium Enterprises (MSMEs).
How will it speed up loan processing?
ULI integrates data sources like Aadhaar, e-KYC, land records, and PAN databases. This allows lenders to quickly assess your creditworthiness, cutting down the time it takes to process loans. “ULI creates an ecosystem of fast and easy access to credit, which is particularly beneficial for MSMEs and farmers who often need loans quickly,” says Rishi Agrawal, CEO and Co-Founder of Teamlease Regtech.
Conventional lending often involves lengthy paperwork and waiting periods, especially when lenders lack historical data on borrowers. This can lead to higher interest rates for borrowers. “ULI simplifies this by streamlining documentation and reducing the time taken for credit assessment,” Agrawal explains.
In essence, ULI will make borrowing easier, quicker, and more cost-effective for you.
How does ULI help borrowers?
Ashish Goyal, Co-Founder & CFO of Fibe, believes ULI will make the lending process smoother for borrowers by reducing the hassle and delays associated with getting a loan. “It’s a game-changing initiative to digitalise lending, allowing for quicker, more accessible loans tailored to your needs,” says Goyal.
According to Atish Shelar, Chief Operating Officer of TechFini, ULI also reduces the risk of malpractices in lending. “By standardising procedures, ULI will help eliminate some of the unfair practices that have plagued the lending industry,” Shelar notes.
Key features of ULI
Consent-based digital access: ULI provides lenders with access to your financial and non-financial data, including land records, through a consent-based system.
Common and standardised APIs: ULI’s standardised APIs will make it easier for lenders to access data, reducing the complexity of integrating new systems.
Plug and play: Lenders can use ULI’s ready-made infrastructure to start providing loans immediately, without the need for extensive technical setup.
What are the benefits of ULI?
Frictionless credit: ULI minimises paperwork, making the lending process smoother, especially for rural borrowers and small businesses.
Faster loan approvals: By consolidating data from multiple sources, ULI speeds up the credit evaluation process.
Centralised data access: ULI brings together financial and non-financial data, making it easier for lenders to assess your creditworthiness.
Focus on agriculture and MSMEs: ULI is designed to help sectors that have long faced credit shortages, such as farming and small enterprises.
Connecting with other digital systems
ULI will be part of the digital ecosystem that includes Jan Dhan, Aadhaar, and UPI, making it a key player in India’s efforts to improve financial inclusion. This integration will help address the existing demand for credit and strengthen India’s digital infrastructure.
First Published: Aug 29 2024 | 5:18 PM IST
