RBI Governor Shaktikanta Das announced that the Unified Lending Interface (ULI) will soon be introduced to facilitate frictionless credit delivery.
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- Pilot Project: Continuing on the journey of digitalisation of banking services, the pilot project for a public tech platform for frictionless credit facility was announced in August last year.
- Transforming Role: ULI will play a similar role in transforming the lending space in the country, just as United Payment Interface (UPI) revolutionized the payment ecosystem.
Features of Unified Lending Interface
- Unified Platform: ULI provides a consolidated tech platform for frictionless credit delivery, akin to UPI’s role in payments.
- Standardized Application Programming Interface (APIs): It has common and standardized APIs designed for an approach to ensure digital access to information from diverse sources, i.e., information relevant to a lender giving out a loan to a potential borrower.
- Seamless Data Flow: Facilitates the seamless, consent-based flow of digital information, including land records, from various service providers to lenders.
- Enhanced Credit Appraisal: Reduces the time and complexity of credit appraisal by integrating financial and non-financial data from disparate systems like Central and State governments, account aggregators, banks, etc.
- Reduced Documentation: Enables quicker credit turnaround with minimal documentation requirements.
- Consent Based Structure: The entire system is consent-based, i.e., based on the consent of the potential borrower.
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| About Digital Public Infrastructure:
Digital Public Infrastructure refers to basic technology systems, created mainly in the public sector, that are openly available to users and other developers. It enables the delivery of public services, such as identification, payments, health, education, and governance.
Features of DPI:
- They are scalable, and thus can support systems that operate on a population-wide scale;
- They are interoperable, and therefore spur innovation by being accessible to innovators;
- They are also cost efficient by virtue of their economies of scale.
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Significance of ULI
- Improved Accessibility: Addresses large unmet credit demand, especially for agricultural and MSME sectors.
- Streamlined Processes: Enhances efficiency in credit delivery and reduces operational complexities for lenders.
- Empowers Innovation: Supports fintechs and lenders in creating tailored lending solutions by providing access to comprehensive data sources.
Challenges to the Unified Lending Interface
- Data Privacy: AI integration raises concerns about handling large volumes of personal data and potential breaches of privacy.
- Bias and Authenticity: The risk of biases in AI models and the authenticity of training data need to be carefully managed.
- Ethical Governance: Ensuring that AI models are explainable and free from biases is crucial to maintaining fairness and accountability in decision-making.
- Technical Complexity: Managing the integration of various data sources and ensuring seamless technical operations.
- Regulatory Compliance: Adhering to regulatory requirements while implementing new technologies and ensuring data integrity.
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