• UGI USER
  • Sep 03, 2024
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RBI’S UNIFIED LENDING INTERFACE REVOLUTIONIZES RURAL CREDIT ACCESS

Why in the news?

The RBI launched the Unified Lending Interface (ULI) to streamline credit access for farmers and MSMEs, enabling quicker loan approvals through seamless data integration and reduced documentation.

source:medium

Introduction to Unified Lending Interface (ULI):

  • The Reserve Bank of India (RBI) announced the launch of the Unified Lending Interface (ULI) as part of its digital public infrastructure strategy.
  • Developed by the Reserve Bank Innovation Hub, Bengaluru, ULI is designed to enable seamless credit access for farmers and MSME borrowers.
  • ULI facilitates the flow of digitised financial and non-financial data from various sources to lenders, simplifying credit underwriting and enhancing customer experience.

How ULI Works:

  • ULI provides a platform for the frictionless transfer of digital information, including land records, through standardised APIs.
  • It simplifies the credit appraisal process, particularly for rural borrowers and those without a credit history, by reducing documentation requirements.
  • Lenders can access data from government databases and satellite imagery, making the credit process faster and more efficient.
  • The platform supports a ‘plug and play’ model, allowing financial institutions to easily connect and retrieve relevant borrower data.
What is Unified Lending Interface (ULI):

  • Background: Initiated by the RBI in August 2023 as a pilot project to streamline credit processes, the platform was recently named Unified Lending Interface (ULI) by the RBI Governor.
  • Need: India’s digitalization has advanced rapidly, but credit appraisal data remains scattered across various systems, hindering smooth lending processes.
  • About: ULI facilitates a seamless, consent-based flow of digital information, including state land records, to lenders.
  • It expedites credit appraisals, especially benefiting rural and smaller borrowers. Standardised APIs enable easy integration and reduced documentation.
  • Benefits: ULI addresses the unmet demand for credit in agriculture and MSME sectors by digitising access to essential data.
  • It is seen as a major advancement alongside JAM and UPI in India’s digital infrastructure.

About Unified Payments Interface (UPI):

  • About: Launched in 2016 by NPCI, UPI integrates multiple bank accounts into a single mobile app, enabling seamless fund routing and merchant payments.
  • Features: Immediate 24/7 money transfer, single app for multiple bank accounts, hassle-free transactions without detailed account info.
  • Benefits: For banks, it provides a universal app and secure transactions. Merchants benefit from easier fund collection, and customers enjoy round-the-clock availability and secure transactions.

Associated Article:

https://universalinstitutions.com/access-to-rural-credit-challenges-solutions/