RBI reviews ULI rollout with lenders amid slow adoption

Mumbai: The Reserve Bank of India (RBI) leadership on Wednesday met officials of banks and non-banking finance companies to discuss the way to boost lending under the Unified Lending Interface (ULI), which is positioned as the UPI for loans.M. Nagaraju, secretary, department of financial services, and RBI deputy governor, T. Rabi Sankar, were present at the meeting. The two officials had also met last month in New Delhi to discuss scaling up ULI, which is a digital public infrastructure in the lending space and aims to unlock critical financial, non-financial and alternative data for lenders to enable informed credit decisions."The regulator wanted to know whether ULI is facing issues, and how to resolve them," said a person aware of the discussions. "Some lenders told the RBI that they already have the technology stack and tie-ups in place for different loan products and, hence, the integrating ULI has been slow."The person cited above also attributed a slow start to regulatory scrutiny on the type of instruments that would have been at the vanguard of the ULI, developed by the Reserve Bank Innovation Hub."Adoption also was lower because of the overall caution among lenders, especially in the unsecured segment," said the person aware of the discussions. "Incidentally, the early use case was around small-ticket personal loans, which came under regulatory scrutiny."More than 600,000 loans amounting to ₹27,000 crore have been disbursed using the ULI platform until early-December 2024, RBI data showed.According to industry executives, the sources of lead for lenders in ULI was mainly surrounding personal loans and unsecured small-business lending, both of which dried out because of cautious lending. "Some lenders also tried supply chain financing via ULI. But that too did not take up. Lending is a growing market, hence ULI will also pick up gradually. However, there needs to be the establishment of a use case," said a senior official with a Mumbai-based NBFC. At least 36 lenders, including various banks and NBCs have been onboarded till December 2024. These lenders are using more than 50 data services including, authentication and verification services, land records data from six states, satellite service, property search, dairy insights and document verification, to gain customer information.