RBI to launch Unified Lending Interface to transform lending space: Das
Aug 26, 2024
There should not be in any rush to roll out system-wide CBDC before one acquires a comprehensive understanding of its impact, Das said
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said that the central bank was set to launch Unified Lending Interface (ULI) nationwide soon as it expects this platform to transform the lending sector in India much like UPI has transformed the payments ecosystem.
The pilot for ULI was launched last year by RBI to enable frictionless credit. And based on the experience of the pilot, RBI has decided to launch 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 seamless and consent based flow of digital information, including even 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 APIs, designed for a 'plug and play' approach to ensure digital access to information from diverse sources resulting in reducing the complexity of multiple technical integrations.
As a result, it enables borrowers to get the benefit of seamless delivery of credit, quicker turnaround time without requiring extensive documentation, he said.
“In sum, by digitising access to customer’s financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers,” Das added.
Speaking on central bank digital currency (CBDC), Das highlighted that there should not be any rush to roll out system-wide CBDC before one acquires a comprehensive understanding of its impact on users, on monetary policy, on the financial system and on the economy.
“Such understanding would emerge from generation of user data in pilots. 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 also cross-border payments,” Das added.
RBI launched CBDC pilots both in retail and wholesale segments back 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, currently both the offline and programmability functionalities are also being tested. The programmability feature of CBDC could serve as a key enabler for financial inclusion by ensuring delivery of funds to the targeted user,” Das said.
[The Business Standard]
