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Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said the technology platform called Unified Lending Interface (ULI), which is currently in the pilot phase, will enable hassle-free credit access while providing banking services to farmers and MSME borrowers.
“The platform facilitates seamless and consent-based flow of digital information, including land records of various states, from various data service providers to lenders,” Mr Das said while speaking at the Global Conference on Digital Public Infrastructure and Emerging Technologies in Bengaluru.
“This reduces the 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 various sources,” Mr Das added.
He said this will reduce the complexity of multiple technology integration and enable borrowers to benefit from seamless delivery of loans and quick timely disbursement without extensive documentation.
“By digitising access to financial and non-financial data of customers, which otherwise remains in different silos, ULI is expected to address the huge unmet demand for credit across various sectors,” Mr Das said, adding that there are plans to roll out ULI across the country.
“Just as UPI transformed the payments ecosystem, we expect ULI to play a similar role in transforming the lending sector in India,” the Governor said.
Central bank digital currencies (CBDCs) have recently dominated policy discussions around the world. In India, the RBI launched CBDC pilots in both the retail and wholesale sectors in late 2022. While the retail pilot began with the initial use case of payments, both offline and programmability functionalities are currently being tested as well.
He said the programmability feature of the Central Bank Digital Currency (CBDC), which currently has over 5 million users and 16 partner banks in its retail pilot, can serve as a key enabler for financial inclusion by ensuring the delivery of funds to the targeted user.
Giving an example, he said sharecroppers, who often face difficulty in accessing agricultural loans for inputs and raw materials as they do not have land ownership to present to banks, can now access loans by programming the end-use for purchase of agricultural inputs.
He said that programming could provide the required convenience to the banks and thus the identity of the farmer would be established not on the basis of his land but on the basis of the end use of the funds being disbursed.
“Another new experiment is that farmers are getting purposeful funding through programmable CBDC to create carbon credits. Other new experiments aimed at testing features such as anonymity and offline availability are proposed to be introduced gradually,” the governor said.
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