The lending industry has been growing subtly with the digitalization of lending processes however; there are still different loopholes in the industry, which need to be mended. Unified Lending Interface or ULI can bring that revolution in the lending space, as UPI or Unified Payments Interface did in the payments arena. RBI announced the launch of ULI in the near term and how it can transform the lending industry.
What is Unified Lending Interface?
Unified Lending Interface can be defined as a digital lending space or platform where the lending process will take place quickly and without much human interaction. To understand the ULI platform better, you can relate it to the Unified Payment Interface. ULI will be similar to UPI where the assessing data will be easy, it will cut down the time of loan approval, and streamline the entire lending process. When you use UPI, you do not have to individually enter the details of the merchant or the person you are sending money to, it is already on the database of the platform and all you need is to select the recipient and vice versa.
How ULI can revolutionize the lending landscape?
Now as per RBI’s Governor, the ULI platform will have a standardized Applications programming interface (api) which will fetch data from multiple sources and allow the user digital access to the same for making the lending procedure a smooth journey. Currently, the data required for loan/ credit delivery online is present with banks, account aggregators, governmental sites, credit bureaus, and digital authorities. This makes the verification process slow in the case of digital lending as well. With the introduction of ULI, RBI expects these issues to subside and thus the time taken for loan disbursal can be reduced significantly.
ULI platform will minimize the hundreds of technical integrations required in the lending process, which in turn will reduce the time of loan approval/ delivery. Borrowers will also enjoy minimum documentation. Even in the digital lending space, if you want to avail a loan, you need to upload all the documents like PAN, bank statement, and others for verification purposes. Now with the ULI platform, the documentation can be reduced drastically cutting down a whole lot of time.
Now you may be wondering if all the information will be easily accessible, then how to protect them from hackers, and other such entities. Addressing this, the RBI governor said that the platform would be a consent-based platform. Only if you allow the platform to use your data then only it will do so.
What has RBI announced regarding ULI?
Shaktikanta Das, RBI’s Governor proposed Unified Lending Interface yesterday, which was earlier introduced by him in August 2023 as frictionless credit, which has been a public tech platform for easy credit. He said that this ULI has the power to revolutionize the lending landscape of the country as the UPI did. He also added that this initiative is mainly for uplifting the small-scale borrowers, and rural borrowers.
Mr. Das also gave a name to the combination of JAM-UPI-ULI, which is a new trinity that can revolutionize the whole country.
Wrapping up
With the rapid digitization, the need for a unified lending interface was brewing up and now it is almost here, ready to take over the lending industry. Moreover, making it a consent-based platform, will help in keeping the user data secure too.
Source: TheIndianExpress
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