Obtaining a loan is now simpler with ULI: You can borrow money without needing a credit history, salary verification, or income proof. Stay tuned for ULI’s launch date and more details.
- Securing a loan has become more accessible for many, but remains a difficult process for some. Obtaining a loan from a bank can still be challenging, especially if you lack a credit history or the necessary documentation. Without internet banking, the paperwork process will likely be slower, and you may need to visit your bank branch multiple times to finalize the formalities. However, there’s good news—this situation is expected to improve significantly in the near future.
- To enhance accessibility to loans for a wider range of borrowers, the Reserve Bank of India (RBI) has introduced an innovative technology platform known as the Unified Lending Interface (ULI). But what exactly is ULI, and how does it function? Could the Unified Lending Interface follow in the footsteps of the Unified Payments Interface (UPI) and revolutionize lending in India? Keep reading to discover the answers to these questions and more.
What is ULI?
Dilip Modi, Founder and CEO of Spice Money, explains that the Unified Lending Interface is a digital platform designed to simplify lending procedures, making credit access more seamless, especially for rural and smaller borrowers.
How will ULI work?
- ULI aims to consolidate all relevant borrower information onto a single platform, streamlining a process that currently operates in isolated silos.
- Rahul Jain, CFO of NTT DATA Payment Services India, explains that ULI, as a nationwide platform, will offer lenders streamlined access to a centralized digital database, encompassing both financial and non-financial data of borrowers.
- Ashish Goyal, Co-founder and CFO of Fibe, explains: “A comprehensive financial profile of borrowers will be created by consolidating various financial data, including Aadhaar, e-KYC records, PAN details, and state land records. This integrated approach will allow banks, NBFCs, and fintech companies to interact effortlessly on an open API platform, ensuring smooth data exchange and enhanced financial connectivity.
- Ajay Rajan, Country Head of Government, Multinational & International Business, Transaction Banking & Knowledge Units at YES Bank, explains that ULI will leverage a standardized API to seamlessly connect various financial and non-financial data sources, including GSTN and land records. This will enable a consent-based, “plug and play” data flow for lenders. “By adopting this approach, lenders can significantly streamline data access and minimize the complexity of technical integrations, as they only need to connect with ULI instead of developing custom integrations for each data source,” he adds.
How will ULI help borrowers?
- ULI streamlines the loan approval process by consolidating data from multiple sources, including Aadhaar, e-KYC records, state land records, PAN details, and account aggregators. Rather than storing this information in a centralized database, ULI retrieves it instantly whenever a borrower applies for a loan, ensuring that the financial profile is always current and complete. Additionally, ULI accesses crucial details such as credit history and employs integrated systems to deliver fast, efficient responses to borrowers.
- Let’s take the example of a farmer seeking a loan. ULI applies a customized set of criteria specific to the borrower, including factors like crop type, soil conditions, and other relevant elements. By assessing these variables, the system calculates the optimal loan amount for the farmer, as Jain explains.
Faster and quicker loans: ULI aims to reduce loan evaluation and disbursal time:
- The borrower’s data will be accessible for real-time analysis, streamlining the loan evaluation process for faster results. According to Goyal, this seamless integration of data will not only accelerate decision-making for lenders but also automate credit assessments, enhancing efficiency.
- ULI will grant banks access to customers’ digitally verifiable financial footprints, offering real-time data that streamlines processes and boosts efficiency. This instant availability accelerates loan assessments and approvals. “Lending institutions can harness ULI-provided data alongside advanced analytics and digital underwriting to evaluate risk profiles more accurately and deliver tailored loan products. Automating the credit process not only enhances financial and operational efficiencies for lenders but also elevates the customer experience, ultimately promoting financial inclusion throughout the banking industry,” explains Rajan.
- According to Gaurav Jalan, Founder & CEO of mPokket, the platform will leverage automated systems to evaluate creditworthiness, enabling swift, data-driven decisions on loan approvals or rejections.
Which loans can you take through ULI?
- Goyal explains, “The pilot program, initiated a year ago, encompassed a wide range of products, such as personal loans, MSME loans without collateral, dairy loans, home loans, and Kisan Credit Cards.”
- Currently, the ULI platform offers a wide range of lending models, including MSME loans, farmer loans, personal loans, and more. Rajan anticipates that as additional data sources become available over time, the platform’s portfolio of lending products will continue to grow and diversify.
- The positive aspect is that this initiative will address the significant unmet demand for credit across multiple sectors. “Although its primary focus is on borrowers from agriculture and medium, small, and micro enterprises, it won’t be confined to these categories. The program aims to offer seamless credit access to a wider pool of borrowers, including individuals seeking personal loans,” Modi explains.
When will ULI be launched?
- ULI is currently in its pilot phase and is set to launch in the near future.
- The initiative will also contribute to advancing financial inclusion.
- Joydip Gupta, Head of APAC at Schematic, explains, “Imagine I’m a farmer or a fisherman with no formal financial records to prove that my business is thriving or that I have a stable income. Typically, a lender would consider me a high risk and deny my loan request due to the lack of insight into my repayment ability. However, with ULI (Unified Lending Infrastructure), lenders gain access to more comprehensive data, enabling them to make better-informed decisions about my financial situation. As a result, individuals from these underserved sectors, who previously struggled to secure loans, will now have a better chance. This is the essence of financial inclusion.”