Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said a technology platform called Unified Lending Interface (ULI), currently at a pilot stage, would enable friction-less credit while delivering banking services to farmers and MSME borrowers.

“This platform facilitates seamless and consent based flow of digital information, including even land records of various States, from multiple data service providers to lenders,” Mr. Das said speaking at a global conference on digital public infrastructure and emerging technologies in Bengaluru.

“This cuts down time taken for credit appraisal, especially for small and rural borrowers. The ULI architecture has common and standardised APIs, designed for a ‘plug and play’ approach to ensure digital access to information from diverse sources,” Mr. Das added.

He said, this will reduce the complexity of multiple technical integration and enable borrowers to benefit from seamless delivery of credit and quicker turnaround time without extensive documentation.

“By digitising access to customer’s financial and non-financial data that otherwise reside in disparate silos, ULI is expected to cater to large unmet demand for credit across sectors,” Mr. Das said, adding a nationwide introduction of the ULI in on the anvil

“Just like UPI transformed the payments ecosystem, we expect ULI will play a similar role in transforming the lending space in India,” the governor said.

Central Bank Digital Currency (CBDC) has dominated recent policy discourse across the world. In India, the RBI launched CBDC pilots in both retail and wholesale segments in late 2022. While the retail pilot started with initial use case of payments, currently both the offline and programmability functionalities are also being tested.

 He said the programmability feature of Central Bank Digital Currency (CBDC), whose retail pilot currently has over 5 million users and 16 participating banks, could serve as a key enabler for financial inclusion by ensuring delivery of funds to the targeted user. 

Illustrating this he said tenant farmers who often find it difficult to access agricultural credit for inputs and raw materials as they do not have the land title to submit to the banks, could now avail credit by programming the end use for purchase of agricultural inputs. 

Programming can give the required comfort to banks and thus establish the identity of a farmer not through his land holding but through the end use of funds being disbursed, he added. 

“Yet another path breaking use case is farmers getting purpose bound money through programmable CBDC for generation of carbon credits. Other new use cases aimed at testing features such as anonymity and offline availability are proposed to be rolled out gradually,” the governor said.