By ESHWAR VIJAY
Now The Reserve Bank of India has launched a unified lending interface or ULI for faster loan dispersal. Now the ULI is expected to play a similar role as UPI did in the consumer payment space.
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Unified Payments Interface or UPI a real-time payment system was launched in India in India in April 2016 by the National Payments Corporation (NPCI). It has contributed significantly to the expansion of digital retail payments in India. Banks promoted the NPCI itself, with the Reserve Bank of India providing advice.
While initial participants on the UPI platform were Banks, non-bank third-party app providers, and the use of QR codes have all combined in popularizing the UPI It has since emerged as a reliable, affordable, and portable retail payment system that is garnering interest from people all across the world.
The unified payment interface system has literally revolutionized the payment industry it uses the IMPS system for faster payment and its former techniques. IMPS is faster than NEFT and lets you transfer money immediately unlike NEFT it works 24/7.
This means that online payment will become much easier without requiring a digital wallet, credit card, or debit card. Currently, if you want to make a bank payment online you have to enter the account number, account types, bank name, and IFSC code even if you have all these details typing it all in particularly on a phone is a painful process.
The idea behind the UPI is to do away with all of this the interface will allow account holders across back to send and receive money from their smartphones using their Aadhar unique identity number, mobile phone number, or virtual payment address without entering bank account details.
Today you will no longer need to use a particular app to send or receive money for example if you use a taxi service at the end of the journey users have to give your virtual address and the travel requests money from it. you will get a message on your mobile phone with a simple authentication. once you authenticate the transaction by entering your password it will be complete.
This process doesn’t require either the driver or you to share bank details. Since UPI runs on IMPS the service will be available in real-time and 24/7. UPI system actually puts digital wallets on trade. It is the new faster method for payments.
continuing on this journey of digitalization of banking services last year RBI launched a pilot of a technology platform ULI (unified Lending interface) that enables frictionless credit. This initiative is very important for all policy makers for all authorities whether they are from governments or central banks or their private Banks or Private Financial companies.
What is ULI (unified Lending interface)?
This initiative which RBI launched last year is still in the pilot mode. It’s a technological platform that makes credit more seamless. From now RBI proposed to call it the unified Lending interface that is ULI.
This platform facilitates a seamless flow of digital information including even land records of various States from multiple data service providers to lenders. This shortens the time needed for credit evaluation, particularly for rural and small-scale borrowers.
The ULI architecture has common and standardized APIs designed for a plug-and-play approach to ensure digital access to information from diverse sources. That is information relevant to a lender for giving out a loan to a potential borrower.
The entire system is consent-based which means it is completely based on the consent of the potential borrowers. Additionally, the need for data privacy is completely safeguarded.
This entire platform or this initiative reduces the complexity of multiple technical Integrations. It enables borrowers to get the benefit of seamless delivery of credit in a quicker turnaround time without requiring extensive documentation. Currently, it takes about roughly 8 to 10 days before a loan is cleared off.
In some by digitizing access to customer’s financial and non-financial data that otherwise resided in disparate silos.
ULI which is a Unified lending interface is expected to serve to large unmet demand for credit across various sectors particularly for Agricultural and MSME borrowers. Based on RBI’s experience from the pilot project a nationwide launch of the ULI will be done in due course.
Just like the UPI transformed the payments ecosystem RBI expects that ULI will play a similar role in transforming The Lending ecosystem in India. The new Trinity because the earlier Trinity was Jandhan Aadhar mobile Jam Trinity so The new Trinity of jam UPI and ULI will be a revolutionary step forward in India’s digital infrastructure Journey.
Here’s a comparison table that highlights the key features and differences between ULI (Unified Lending Interface) and UPI (Unified Payments Interface)
| Feature | UPI (Unified Payments Interface) | ULI (Unified Lending Interface) |
|---|---|---|
| Purpose | Facilitates real-time payments between bank accounts using mobile devices. | Facilitates seamless and faster credit disbursal by connecting lenders with borrowers through a unified digital platform. |
| Launch Date | April 2016 | Pilot launched in 2023; full-scale launch expected in due course. |
| Primary Use | Enables users to send and receive money instantly through smartphones using UPI ID, Aadhaar, or mobile number. | Provides a platform for lenders to access digital information (e.g., land records, financial data) for quicker credit evaluation. |
| Technology Base | Utilizes IMPS (Immediate Payment Service) for instant money transfer, available 24/7. | Uses standardized APIs for a plug-and-play approach to access information from diverse sources for credit assessment. |
| Participants | Banks, non-bank third-party app providers, and users (consumers). | Lenders (banks, financial institutions) and data service providers (e.g., government land records). |
| Data Handling | No need to enter extensive bank details; transactions are secured through simple authentication (e.g., password). | Consent-based data sharing ensures borrower privacy; facilitates access to financial and non-financial data from multiple sources. |
| Impact on Industry | Revolutionized the payment industry in India, making digital transactions easier and more accessible to the general public. | Expected to revolutionize the lending industry by reducing the time and complexity of obtaining loans, particularly for rural and MSME borrowers. |
| Documentation Required | Minimal; primarily just authentication via password or PIN. | Minimal; reduces the need for extensive documentation by digitally accessing borrower data. |
| Speed of Process | Instantaneous transactions. | Significantly reduces loan approval time from 8-10 days to a much shorter period. |
| Security | Transactions secured with two-factor authentication. | Data privacy is fully safeguarded; system is entirely consent-based. |
| Target Audience | General public, small businesses, and merchants. | Lenders, rural borrowers, MSMEs, and other sectors with unmet credit demand. |
| Global Appeal | Gaining interest worldwide as a reliable and cost-effective payment system. | Aims to address large unmet credit demands in various sectors, potentially serving as a model for other nations. |
| Role in Digital Infrastructure | Part of India’s JAM Trinity (Jan Dhan, Aadhaar, Mobile) for financial inclusion. | Represents the new Trinity of JAM, UPI, and ULI, furthering India’s digital infrastructure journey. |
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