Unified Lending Interface: Revolutionizing Access to Credit
Dr Gagana Behari Sahoo, PhD,CAIIB,PMP
Certified Independent Director(Reg. No. : IDDB-NR-202212-045420) and ESG Expert
Unified Lending Interface: Revolutionizing Access to Credit
Dr.Gagana Behari Sahoo
Access to credit is a fundamental driver of economic growth, empowering entrepreneurship, personal goals, and societal advancement. However, the lending system has long been plagued by challenges such as inefficiencies, limited inclusivity, and a lack of trust between borrowers and lenders. The Unified Lending Interface (ULI) is being spearhead by RBI as a new entrant to form the Trinity of India’s Digital Infrastructure, JAM-UPI-ULI. Just like the UPI transformed the payments ecosystem, the ULI will play a similar role in transforming the lending space in India. The Unified Lending Interface (ULI) is a groundbreaking advancement that aims to overcome the barriers by offering a smooth, inclusive, and tech-driven lending framework. This innovation represents a major shift in how credit is accessed and distributed, with the potential to deliver significant economic and social benefits.
The ULI platform has unlocked critical financial, non-financial and alternate data for lenders including digitized state land records, milk pouring data from milk federations, satellite data and property search services etc through a single interface. With a ‘one-time integration’ with this platform, lenders can leverage information from all these sources, eliminating the need for them to carry out multiple bilateral integrations with each data and service provider.
Key Data Sources, Frameworks, and Platforms of Unified Lending Interface (ULI): All the key players that are connected to ULI can be represented in a visual ecosystem map as follows:
All the players are grouped into following:
Based on the above, the Data flow in ULI may be envisioned to flow as follows:
ü Borrower initiates a loan request via LSP.
ü Consent is requested and managed via a Consent Manager.
ü Upon consent, data is pulled from authorized sources via ULI.
ü Lender evaluates and processes the application.
ü Borrower receives offer and terms.
To achieve the stated Objective, ULI framework integrates the following Data Sources, platforms viz.:
1. Land Record Systems: Integrates digital land record systems of state governments.
2. GSTN Data: Fetches GSTN forms and other relevant data.
3. Milk Pouring Insights: Cash flow and milk pouring data from State Dairy Federations
4. Satellite Data: Provides satellite imagery and analytics data.
5. Authentication & Verification: Enables Aadhaar e-KYC, e-Sign, PAN validation, Bank account verification, e-Stamping.
6. Transliteration: Transliterating documents to various languages.
7. Account Aggregators: AA Framework is a consent-based RBI-regulated platform that enables customers to share their financial information across institutions, streamlining access for lenders and facilitating quicker, informed lending decisions in real time.
8. Digilocker : Provides secure access to verified documents of customers.
9. House/Property Search Data: Consolidates property data & analytics from various sources (real estate authorities, legal authorities, etc) for underwriting housing loans.
10. CGTMSE: Facilitates government-backed credit guarantee scheme for MSMEs
11. End-to-end Digitalization of KCC Lending: Making working capital accessible seamlessly to 120 million farmers across India, at their doorstep, via the Unified Lending Interface.
12. End-to-End Digitalization of Cattle Financing: Seamless, paperless delivery of credit to India’s 80 million dairy farmers, using milk collection data from cooperative societies, via the Unified Lending Interface.
13. Public Credit Registry (PCR): Central database that stores comprehensive credit information of borrowers to help lenders assess creditworthiness and reduce information asymmetry in the credit market.
14. Credit Information Companies (CICs) or Credit Rating Agencies: Companies like CIBIL, Equifax, Experian etc collect and maintain credit information of individuals and businesses.
15. Trade Receivables Discounting System (TReDS): TReDS is an electronic platform that allows MSMEs to auction their trade receivables at competitive rates.
16. Peer-to-Peer (P2P) Lending Platforms: Online platforms like Faircent and Lendbox allow individuals to lend and borrow money directly from each other.
17. ONDC: It is an initiative by the Government of India to create an open, decentralized network for digital commerce — kind of like what UPI (Unified Payments Interface) did for digital payments, but for e-commerce. ONDC aims to create a common platform where any buyer app can connect to any seller — across sectors like retail, food delivery, mobility, and more.
18. Digital Document Execution for Loan Documents: DDE refers to the end-to-end digital signing, verification, and storage of legal agreements viz. loan agreements — without the need for physical paperwork or wet-ink signatures. It allows borrowers and lenders to sign and execute loan contracts online using secure digital tools like:E-signatures (via Aadhaar, DSC, or OTP-based); E-stamping (digital stamp duty payment); Digital storage (cloud or secure vaults).
19. OCEN(Open Credit Enablement Network): OCEN is a super exciting development in the fintech and lending space in India. It’s a framework (not a product or app) that aims to democratize credit — making loans accessible to millions of individuals and small businesses by embedding credit into digital platforms they already use. Think of OCEN as doing for credit what UPI did for payments: creating an open, interoperable, and scalable infrastructure for seamless lending.
20. BharatNet: It is a flagship project by the Government of India aimed at providing high-speed broadband connectivity to all Gram Panchayats (village councils) across the country. It’s the world’s largest rural broadband project, and a key part of India’s Digital India initiative.
Key Features of ULI:
1. Open & Interoperable Lending Protocol
a. ULI acts as a standardized digital layer that connects all players in the lending ecosystem — borrowers, lenders, platforms, and data providers.
b. Ensures interoperability — just like UPI allows any app to send/receive money across banks, ULI allows any platform to originate loans with any lender.
2. Loan Service Provider (LSP) Model
a. Enables platforms (like e-commerce, gig, fintech, ERP tools) to become Loan Service Providers.
b. LSPs don’t lend money themselves, but connect borrowers to lenders using ULI protocols.
3. Consent-Based Data Sharing/ Digital Access
a. Powered by the Account Aggregator (AA) framework.
b. Borrowers can securely share financial data (GST, bank, income, etc.) with lenders, with full consent.
c. Helps lenders make data-driven decisions, especially for those with little to no credit history.
4. Plug-and-Play APIs
a. ULI provides modular APIs for every part of the loan lifecycle:
b. Makes it easy for anyone (even non-fintech platforms) to offer embedded credit services.
5. Digital-First & Paperless
a. From onboarding to disbursement, everything is fully digital:
i. Instant disbursal into bank accounts
6. Standardized Credit Products
a. ULI defines pre-built loan product templates:
b. Makes it easier for lenders and platforms to plug into common offerings.
7. Built for Scale and Inclusion
a. Designed to work across India, especially to:
8. Trust Layer
a. Built-in compliance, transparency, and consent mechanisms.
b. Uses UIDAI, AA, PAN, NeSL, and other trusted sources for verification and contract registration.
9. Credit Portability
a. Borrowers can switch lenders, prepay loans, or refinance more easily.
b. Promotes a competitive lending ecosystem, avoiding borrower lock-in.
10. Future-Ready & Ecosystem Driven
a. OCEN (credit protocol layer)
b. AA (data layer)
c. BharatNet/PM-WANI (connectivity)
d. DigiLocker, Aadhaar (identity/doc layers)
Potential Benefits:
A. For Borrowers
i. Frictionless Credit: ULI aims to facilitate a smoother lending experience by minimizing paper work, particularly for smaller and rural borrowers
ii. Focus on Agriculture and MSMEs: ULI is expected to address the large unmet demand for credit in sectors such as agriculture and Micro, Small, and Medium Enterprises (MSMEs).
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iii. Tenant farmers who often find it difficult to access agricultural credit can also avail loans by establishing their identity not through his land holding but through the end use of funds being disbursed
iv. Expanded Credit Access: Brings formal credit to underserved segments like MSMEs, gig workers and rural borrowers.
v. Transparency and control over personal data usage.
vi. Inclusion of underserved populations using alternate data (e.g., mobile usage, utility payments).
vii. Better loan offers through increased competition.
B. For Lenders
i. Reduced Appraisal Time: By consolidating data from various sources, ULI will minimize the time required for credit evaluation.
ii. Centralized Data Access: The platform will consolidate financial and non-financial data from multiple sources, making it easily accessible to lenders.
iii. Increased Efficiency: Fully digital, API-driven loan processing reduces time and cost for both lenders and borrowers.
iv. Enhanced Transparency: Consent-based data sharing and audit trails ensure trust across the ecosystem.
v. Improved Security: Uses secure protocols (like Account Aggregators, e-sign, e-stamp) to protect sensitive data.
vi. Credit Underwriting: ULI enhances credit underwriting by providing lenders with comprehensive access to digitized customer data, allowing for more accurate credit assessments and faster decision-making
vii. Cost Efficiency for Lenders: By minimizing the need for extensive paperwork and manual data collection, ULI reduces financial institutions’ operational costs. This cost efficiency can translate into lower customer borrowing costs and more resources for lenders to expand their services.
viii. Improved Risk Management: With access to comprehensive and verified customer data, ULI enhances lenders’ ability to manage risk. Real-time data validation reduces the likelihood of fraud and ensures that lending decisions are based on accurate information
ix. Faster decision-making due to standardized data flows.
x. Reduced operational costs through automation.
xi. Expanded addressable market through better credit profiling
C. For Regulators:
i. The platform will reduce the complexity of multiple technical integrations by digitizing access to customer’s financial and non-financial data that otherwise resided in disparate silos.
ii. Increased Financial Inclusion: ULI supports the government’s initiatives to promote financial inclusion by making credit more accessible and equitable. It addresses the large unmet demand for credit in sectors like agriculture and MSMEs, potentially driving economic growth and development in these areas.
iii. Innovation and Competition: The platform encourages fintech companies and other financial service providers to innovate by providing streamlined data access and fostering a competitive environment. This can lead to new digital lending models and more personalized financial products for borrowers.
iv. Improved monitoring and compliance.
v. Auditability of consent and data access trails
PROBLEMS AND ISSUES:
a. Adoption and Training: For ULI to be successful, widespread adoption by financial institutions, borrowers, and other stakeholders is essential. This requires significant training and educating users about the platform’s benefits and functionalities, which can be challenging, especially in regions with low digital literacy.
b. Cost and Maintenance: Concerns exist about the financial viability of scaling up and maintaining the ULI platform. Questions arise regarding who will bear the costs of using the platform and whether these costs will be passed on to borrowers, potentially affecting the cost of borrowing.
c. Data Privacy and Security: With ULI integrating various financial data sources, there is a significant concern about protecting sensitive personal information. A major challenge is ensuring the platform adheres to stringent data privacy standards and prevents unauthorized access or data breaches. Further ensuring encryption, access control, and auditability is critical.
d. Data Quality and Standardization: Inconsistent formats across data providers may hamper effectiveness
e. Interoperability and Standardization: ULI aims to integrate data from various institutions like banks, NBFCs, and fintech companies, each with its own systems and processes. Achieving interoperability and standardization across these diverse systems is a complex task.
f. Role of the Regulator: Given its primary role as a regulator, the Reserve Bank of India (RBI) is debated about whether it should be involved in such initiatives. The focus should be on improving existing processes within banks rather than creating new platforms like ULI. There is also Regulatory Uncertainty since evolving data protection laws may impact architecture and access rights.
g. Technological Infrastructure: Implementing ULI nationwide requires robust technological infrastructure, especially in rural and remote areas where internet connectivity and digital literacy are often lacking. This could pose a significant barrier to the effective deployment of ULI. Further, Adoption and Interoperability has its own challenges since incentivizing participation by legacy institutions and fintechs remains a key hurdle.
Strengthening of ULI to Boost Digital Lending Portfolio: All stakeholders are required to work in Unison to achieve the Goal of Universal Lending to user the ERA of ULI. The tasks are summarized as follows:
1. Deepen Platform Adoption
a. Onboard more Loan Service Providers (LSPs): Bring in more fintechs, gig platforms, ERP tools, e-commerce players, etc.
b. Incentivize LSPs to integrate ULI APIs via grants, co-lending models, or faster lender onboarding.
2. Expand Lender Participation
a. Encourage more banks, NBFCs, co-operative banks, and digital lenders to plug into the ULI framework.
b. Offer regulatory sandboxes or fast-track onboarding for lenders willing to test and scale ULI-based products.
3. Standardize & Diversify Loan Products
a. Build more modular, ULI-compliant loan templates (e.g., agri-loans, education loans, BNPL, invoice financing).
b. Include dynamic pricing tools, risk-sharing models, and embedded insurance options.
4. Strengthen Digital Infrastructure
a. Ensure robust back-end support:
i. High-speed connectivity (BharatNe, 5G)
ii. Cloud-native tech for scalability
iii. Reliable digital identity and KYC layers (Aadhaar, DigiLocker, etc.)
5. Enhance Data Availability via Account Aggregators
a. Expand the AA ecosystem to include:
i. Telecom data
ii. Utility bills
iii. Alternate credit sources (e.g., gig income, e-commerce sales)
b. Educate users on consent and control of their financial data.
6. Improve Risk Assessment Tools
a. Build AI/ML-based credit scoring models using alternative data.
b. Offer credit guarantees or FLDG (First Loss Default Guarantee) mechanisms to reduce lender risk.
7. Focus on Financial Literacy & User Trust
a. Launch awareness campaigns about digital loans and borrower rights.
b. Provide multi-language, simple onboarding flows.
c. Set up a grievance redressal system within ULI architecture.
8. Enhance Regulatory Support & Oversight
a. Update digital lending guidelines to support:
i. Consent-based data flows
ii. Standard loan disclosures
iii. Borrower protection policies
b. Encourage RegTech integrations for real-time compliance.
9. Encourage Public-Private Partnerships
a. Foster collaboration between:
i. Gov’t programs (e.g., Mudra, SIDBI)
ii. Private lenders and fintechs
iii. Development finance institutions for last-mile inclusion
10. Continuous Ecosystem Feedback Loop
11. Ensuring Interoperability and Standardization: Developing standardized Application Programming Interfaces (APIs) is necessary to facilitate interoperability among diverse financial systems. The RBI’s guidelines encourage the development of interoperable sandboxes to test and refine these APIs, ensuring seamless integration across platforms.
Conclusion: The Unified Lending Interface represents a groundbreaking innovation with an aim to transform the lending landscape. By addressing longstanding challenges and leveraging the power of technology, ULI paves the way for a more inclusive, efficient, and transparent credit ecosystem. Its impact extends beyond economic benefits, fostering social empowerment and bridging the gap between aspiration and opportunity. As the world embraces this revolutionary platform, the promise of a fairer and more accessible financial future comes closer to reality.
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# UnifiedLendingInterface #ULI #JAM #UPI #ULI, #LoanServiceProviders #LSP # AccountAggregator
# OCEN #OpenCreditEnablementNetwork
IOD Certified Corporate Director, IICA Certified Independent Director I Independent Consultant I Member, Board of Studies of Academic Institutions I Advocate of Integrative Medicine for Wellness I Blogger
4wThe article is well-written and congratulations on this commendable contribution. It thoughtfully addresses several important aspects of streamlining digital lending. The Unified Lending Interface (ULI) stands out as a promising initiative aimed at improving credit accessibility and operational efficiency by harnessing integrated data and advanced technology. Its potential to drive economic growth and enhance financial inclusion in India is considerable. That said, a critical area requiring greater attention is risk management—for both lenders and borrowers. In today’s data-driven environment, concerns around data security and potential misuse are highly relevant. It is essential that these issues are comprehensively addressed by the government before ULI is rolled out on a national scale. Unlike the UPI model, which facilitates transactions after payment, ULI functions on an advance credit system, inherently exposing lenders to greater risk due to the uncertainty of timely repayment. Without strong regulatory and operational safeguards, this forward-looking initiative could face significant implementation challenges and unintended consequences for all stakeholders.
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4wNice
Independent Director, Mentor, Business & Life Coach, SME IPO and ESG Professional
4wVery well articulate and covered important information related to all parties involved in it. Wonderful. Thanks for sharing Dr Gagana Behari Sahoo, PhD,CAIIB,PMP