Why in news?

The Reserve Bank is piloting an application for frictionless credit —Unified Lending Interface (ULI). It will be launched nationwide soon and will become the UPI on the credit side.

What’s in today’s article?

• Unified Lending Interface (ULI)
• Unified Payment Interface (UPI)

Unified Lending Interface (ULI)

• Background
  • In August 2023, the RBI initiated a pilot project for a public tech platform designed to streamline credit processes, aiming to reduce costs, expedite disbursements, and enhance scalability.
  • Recently, RBI Governor proposed naming this platform the Unified Lending Interface (ULI).
  • He expressed that, much like UPI revolutionized the payments ecosystem, ULI is expected to similarly transform the lending landscape in India.
• Need for ULI
  • India's rapid digitalization has led to the development of digital public infrastructure, encouraging innovation in payments, credit, and financial services by banks, NBFCs, fintech companies, and start-ups.
  • However, the necessary data for credit appraisals is scattered across various systems, creating obstacles to smooth and timely lending.
• About
  • ULI will enable a seamless, consent-based flow of digital information, including state land records, from multiple sources to lenders.
  • This will expedite credit appraisals, particularly benefiting smaller and rural borrowers.
  • The ULI platform, with its standardized APIs, will simplify technical integrations and reduce the need for extensive documentation, making credit delivery quicker and more efficient.
    • It is designed for a plug-and-play approach to enable quicker access.
  • ULI improves digital access from diverse sources for lenders. The ecosystem is based on the consent of potential borrowers and data privacy is protected.
• Benefits
  • ULI will address the large unmet demand for credit, especially in agriculture and MSME sectors, by digitizing access to financial and non-financial data currently housed in separate systems.
  • Experts claim that the combined impact of JAM (Jan Dhan, Aadhar, Mobile), UPI, and ULI as a significant advancement in India's digital infrastructure.

Unified Payments Interface (UPI)

• About
  • UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank).
  • It does so by merging several banking features, seamless fund routing & merchant payments into one hood.
  • In other words, UPI is an interface via which one can transfer money between bank accounts across a single window.
  • It was launched in 2016, by the National Payments Corporation of India (NPCI).
• Features of UPI
  • Immediate money transfer through mobile device round the clock 24*7 and 365 days
  • Single mobile application for accessing different bank accounts
  • Hassle free transactions as customers are not required to enter the details such as Card no, Account number, IFSC etc.
• Benefits of UPI
  • For Banks
    • A universal application for one transaction;
    • A single click Two Factor authentication;
    • Safer and more secure; Enables easy transactions;
    • Unique Identifier
  • For Merchants
    • Easier fund collection; In-App Payments (IAP)
    • No risk of storing the customer's virtual address;
    • Tap customers not having credit/debit cards
  • For Customers
    • Single application for accessing various bank accounts;
    • Round the clock availability;
    • One can easily raise a complaint from the mobile app directly;
    • Use of Virtual ID is secure

UPI Transaction: Statistics

• According to National Payments Corporation of India (NPCI) data, payments using UPI were at Rs 20,64,292.40 crore in value in July 2024.
• The total transaction count was 14,435.55 million in July 2024.