Unified Lending Interface likely to move from Mint Road's hub to new entity

Commercial banks to be stakeholders in NPCI-like body

The Unified Lending Interface (ULI) may be taken out of the Reserve Bank Innovation Hub (RBIH) and housed in a separate utility with banks as stakeholders.

“A new utility has to be created for ULI for it to become commercial. This cannot happen within the RBIH, a wholly-owned subsidiary of the central bank,” said a senior official. Neither the Reserve Bank of India (RBI) nor its subsidiaries undertake commercial operations.

Given the nature of ULI, the sources said, it cannot be folded into the National Payments Corporation of India (NPCI), which has been set up under the Payment and Settlement Systems Act, 2007.

The sources indicated that exploratory talks have been held for examining the creation of a utility for housing ULI with banks as stakeholders. This shall be on the lines of the NPCI, in which state-run banks, private banks, foreign banks, co-operative banks, and regional rural banks hold equity.

The ULI is the rebranding of the Public Tech Platform for Frictionless Credit (PTPFC), developed by the RBIH. Last month, RBI Governor Shaktikanta Das announced that the PTPFC would be rebranded as ULI, and 

compared its potential impact on lending to the transformation brought by the Unified Payments Interface in payments across 

the country.

The ULI aims to facilitate a seamless flow of digital information to lenders and is designed to knit data from various sources — including central and state governments, account aggregators, banks, credit information companies, and digital identity authorities — to eliminate barriers to frictionless and timely credit delivery. The end-to-end platform will feature an open architecture, allowing regulated entities to connect through a “plug-and-play” model.
 

Industry sources have indicated that the RBI is considering expanding ULI participation to include both legacy and fintech non-banking financial companies (NBFCs).
 

Launched in 2023, the PTPFC pilot focused on products such as fully digital Kisan Credit Card (KCC) loans of up to Rs 1.6 lakh per borrower, as well as financial support for dairy, small businesses, vehicle and tractor purchases, digital gold, and home purchases through participating banks.
 

The platform stitched together Aadhaar eKYC (know-your-customer), land records from participating state governments (Madhya Pradesh, Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra), satellite data, permanent account number validation, transliteration, Aadhaar e-signing, account aggregators, dairy co-operative data, and property search data.
 

Based on learnings, the scope and coverage of the platform are expected to expand, including more products, information providers, and lenders. According to the Report on Currency and Finance 2023-24, the PTPFC has demonstrably reduced the turnaround time for KCC loans from several weeks to less than an hour.
 

In February, the government allowed the Goods and Services Tax Network to share data (with firms’ consent) on the platform to expedite loan processing. In April, the National Bank for Agriculture and Rural Development (Nabard) developed a loan-origination system portal to facilitate digital KCC processing for co-operative banks and regional rural banks (RRBs).

House Hunting
 

- A new utility must be established for ULI to make it commercial

- The Reserve Bank Innovation Hub, a wholly-owned subsidiary of the central  bank where ULI has been developed, cannot partake in commercial activities

- ULI will facilitate seamless digital information flow to lenders

- The end-to-end platform will have open architecture, enabling regulated entities to connect via a plug-and-play model

- ULI will integrate data from central and state governments, account aggregators, banks, credit information companies, and digital identity authorities