RBI TO LAUNCH UNIFIED LENDING INTERFACE (ULI)

RBI to launch Unified Lending Interface: What is it and how will it benefit borrowers

Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said that a nationwide launch of the Unified Lending Interface (ULI) will happen in due course. Similar to Unified Payment Interface (UPI), which has revolutionised the retail payment system in the country, ULI will transform the lending landscape.

What has RBI Governor announced?
In August last year, the RBI launched a pilot project for a public tech platform for frictionless credit, as announced It is aimed to bring about efficiency in the lending process in terms of reduction of costs, quicker disbursement, and scalability.


The Reserve Bank of India (RBI) is set to launch a nationwide platform called the Unified Lending Interface (ULI) to speed up credit disbursement, especially to rural and smaller borrowers . This platform is expected to transform the retail lending system, similar to the Unified Payments Interface (UPI) .

How will ULI work?

ULI is an end-to-end digital platform that enables seamless flow of digital information, including land records of various states, from multiple data service providers to lenders . This reduces the time taken for credit appraisals, especially for smaller and rural borrowers .

Benefits of ULI

The platform is beneficial to all stakeholders, including consumers, lenders, and data service providers . Consumers can get frictionless, tailored credit through consent architecture without the need for paper-based documentation or physical visits to financial institutions . Lenders and data service providers benefit due to the network effect, standardization, efficiency in terms of cost, innovation in lending process, scalability, and increasing reach .

Future of ULI

Going ahead, ULI can continue to unlock even more data from sources such as gig platforms and payment systems for driving deeper insights and smarter credit decisions . The platform is currently being developed and handled by the Reserve Bank Innovation Hub, a wholly-owned subsidiary of the RBI that facilitates innovation in the financial sector . However, it will soon have to be handed over to the National Payments Corporation of India or any other entity at a later stage to oversee .

 Unified Payments Interface (UPI) and Unified Lending Interface (ULI) are both digital platforms developed by the Reserve Bank of India (RBI) to enhance financial transactions in India. However, they serve different purposes:

_Unified Payments Interface (UPI):_

- Enables instant, real-time peer-to-peer (P2P) and person-to-merchant (P2M) transactions
- Facilitates fund transfers between bank accounts using a mobile device
- Uses a unique virtual payment address (VPA) for transactions
- Supports multiple payment modes, such as QR code scanning and intent

_Unified Lending Interface (ULI):_

- Aims to streamline and accelerate credit disbursement, especially for smaller and rural borrowers
- Enables seamless flow of digital information for credit appraisals
- Reduces paperwork and physical documentation
- Facilitates tailored credit offerings to borrowers

Key differences:

- Purpose: UPI focuses on payments, while ULI focuses on lending
- Transaction type: UPI handles fund transfers, whereas ULI handles credit disbursement
- User interaction: UPI requires user input for transactions, whereas ULI automates credit appraisals
- Data usage: UPI uses payment data, whereas ULI uses credit-related data

In summary, UPI simplifies payments, while ULI streamlines lending processes, making credit more accessible and efficient.

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