Page 32 - Banking Finance May 2025

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participation in the economy, making it a key infrastructure, ensuring a seamless flow of information
foundation for initiatives like UPI and ULI. between borrowers and lenders. Here's how the system
operates:
2. UPI (Unified Payments Interface) 1. Unified Application:
The Unified Payments Interface (UPI) has transformed
Borrowers can apply for loans through ULI using a
the way Indians conduct digital transactions. Launched
single, standardized platform. Instead of manually
in 2016, UPI enables instant, real-time payments across applying to multiple lenders, the platform connects
different banks through mobile devices, eliminating the
borrowers with a range of banks, NBFCs, and fintech
need for cash and reducing the complexity of traditional
companies.
payment methods.
UPI has dramatically increased the volume of digital 2. Data-Driven Credit Evaluation:
payments in India, fostering a cashless economy and ULI leverages comprehensive financial and transactional
empowering small businesses and consumers alike. With data from various sources, including Aadhaar
its ease of use and security features, UPI has become a authentication, UPI transaction history, and tax filings
global success story and a symbol of India's digital (for businesses). This data-driven approach enables
innovation. lenders to assess the creditworthiness of borrowers with
greater accuracy.
3. ULI (Unified Lending Interface)
The newest addition to the trinity, Unified Lending 3. Faster Loan Approvals:
Interface (ULI), builds on the foundation created by Automation is at the core of ULI, allowing for quicker
JAM and UPI. While JAM focused on bringing people into processing and approval of loans. For smaller loans or
the financial system and UPI on facilitating seamless microcredit, approvals can be near instant, while for
digital payments, ULI aims to close the gap in access to larger loans, the system reduces the time spent on
formal credit by creating a unified lending ecosystem. documentation and verification.

ULI simplifies and accelerates the lending process,
allowing borrowers to access multiple lenders through 4. Access to Credit for All:
a single platform. It uses alternative data sources such ULI prioritizes credit access for underserved segments
as Aadhaar, GST filings, bank statements, and digital like small and medium-sized enterprises (SMEs), rural
transactions to assess creditworthiness, making credit borrowers, and individuals without established credit
accessible to those without traditional financial records. histories. By incorporating alternative credit scoring
models and reducing dependence on traditional credit
How ULI Works bureaus, ULI creates opportunities for financial

ULI is designed to integrate with India's existing digital inclusion.

The Future of ULI in India's Financial
Ecosystem

As part of the RBI's new trinity, ULI has the potential to
transform the credit landscape in India. Here's a look at the
promising future it holds:
1. Bridging the Credit Gap for MSMEs
One of the most significant impacts of ULI will be on Micro,
Small, and Medium Enterprises (MSMEs). Traditionally,
MSMEs have struggled to access formal credit due to a
lack of collateral and insufficient credit history. ULI can
revolutionize MSME lending by using real-time transaction

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