RBI To Roll Out Unified Lending Interface To Offer Credit To Agricultural & MSME Borrowers

In an effort to further give impetus to India’s digital infrastructure, the Reserve Bank of India will soon launch a platform to offer credit to rural and small businesses.

Dubbed ‘Unified Lending Interface’, the platform will cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers, RBI’s governor Shaktikanta Das said on Monday (August 26).

Addressing the RBI@90 global conference on “Digital Public Infrastructure and Emerging Technologies”, the central bank chief said that the RBI piloted the ULI infrastructure last year and a pan-India launch will happen in “due course”.

“Just like Unified Payments Interface (UPI) transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India,” the RBI governor said.

According to Das, the ULI platform facilitates seamless and consent based flow of digital information, including even land records of various states, from multiple data services providers to lenders. Further, it also reduces the time taken for credit appraisal and eliminates the need for extensive documentation.

RBI Governor On DPI, Emerging Technologies

In addition to the ULI infrastructure, the RBI chief also touched upon key themes such as artificial intelligence and India’s digital public infrastructure (DPI).

“DPI has enabled India to achieve, in less than a decade, levels of financial inclusion that would have otherwise taken several decades or more,” Das said.

India has a unique DPI model, wherein the base technical infrastructure is built, operated and managed in the public sector, while the private sector taps the DPI to build customer facing services.

“The advantage of developing DPI in the public sector is that typically the private sector would be averse to capital investment to create infrastructure with uncertain returns,” the RBI governor said, pointing out that privately created infrastructure may not also be amenable to democratised access or interoperability. 

It is pertinent to note that DPI was launched in September last year and helps users find jobs and training opportunities. In her Budget 2024-25 speech, Finance Minister Nirmala Sitharaman proposed large-scale DPI applications for key sectors such as credit, ecommerce, education, health law and justice, logistics, MSME delivery and urban governance.

Meanwhile, Das highlighted that while the integration of AI in the financial services sector can benefit both customers and lenders, the technology can also be misused to spread misinformation, potentially causing severe damage and disruption to DPIs as well as other digital systems.

In the wake of the threats posed by AI, the RBI governor urged regulated financial institutions to exercise caution while adopting AI in critical decision-making segments such as loan sanctioning.

No Rush To Roll Out System-Wide CBDC

While India launched the pilot of its central bank digital currency (CBDC) in 2022, the RBI is in no rush to roll out system-wide CBDC, Das said. He highlighted that such a move would require a comprehensive understanding of its impact on users, monetary policy, the financial system and the economy.

The RBI chief underscored that the emergence of fast payment systems across countries and experimentation around CBDC has opened up new possibilities to achieve greater efficiency in cross-border payment, but that would require ensuring interoperability as a key design element.