RBI Reviews ULI Rollout with Lenders Amid Slow Lending Adoption

The Reserve Bank of India is actively reviewing the progress of the Unified Lending Interface (ULI) implementation following slower-than-expected adoption. ULI, often compared to UPI but for lending, aims to streamline credit disbursement using digital infrastructure, yet banks cite integration and regulatory caution as speed bumps.

Current ULI Performance and Key Challenges

Since its rollout, ULI has disbursed more than 6,00,000 loans amounting to ₹27,000 crore as of early December 2024. Despite this promising start, adoption remains below expectations. A key concern raised by lenders is the difficulty of integrating ULI into their existing digital ecosystems. Many financial institutions already have alternative technology stacks tailored for their loan products, slowing down ULI implementation.

Regulatory Hurdles and Cautious Lending Behaviour

Regulatory scrutiny, particularly for short-term personal loans, has further constrained ULI’s expansion. Early ULI use cases largely focused on small-ticket unsecured personal and business loans, which face increasing oversight. This has prompted lenders to be more conservative in using the platform, especially in segments considered riskier.

Lender Participation and Data Integration

By December 2024, at least 36 lenders were participating in the ULI framework. These include a mix of banks and non-banking finance companies. Through ULI, lenders can access over 50 data services, including authentication, land records from 6 states, satellite imagery, property verification, document checks and dairy-related insights. These tools are designed to enhance lenders’ ability to assess borrower creditworthiness efficiently.

Read More: RBI Governor Signals Possible Further Rate Cuts Amid Easing Inflation!

Need for Concrete ULI Use Cases

Executives believe that ULI adoption could scale meaningfully if clearer, value-adding use cases emerge. Attempts to expand ULI towards supply chain financing have seen limited traction thus far, revealing the need for broader application areas and stronger lender incentives. As digital lending markets evolve, ULI remains crucial to building scalable public infrastructure for credit access.

Conclusion

The RBI’s review of ULI comes at a critical juncture as financial institutions weigh the benefits against operational and regulatory friction. With digital tools in place and over ₹27,000 crore already disbursed, the ULI journey may gain momentum once technical and strategic hurdles are overcome.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities are subject to market risks. Read all related documents carefully before investing.