How ULI can be a game changer for MSME and Agriculture borrowers?

The Reserve Bank of India (RBI) has recently announced that it is set to introduce a new digital platform – Unified Lending Interface (ULI) – poised to do for credit what the Unified Payments Interface (UPI) did for digital payments.

RBI Governor Shaktikanta Das had said the platform facilitates seamless and consent based flow of digital information, including even land records of various states, from multiple data service providers to lenders. This cuts down the time taken for credit appraisal, especially for smaller and rural borrowers.

The Governor also mentioned that the ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers.

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Streamline the lending process

Sandeep Agrawal, Co founder & Director of Teamlease Regtech said, “MSMEs and agricultural businesses often require working capital to manage daily operations such as purchasing raw materials, paying wages, and covering other operating expenses and to invest in growth and sustainability.”

However, they struggle to access formal credit due to the time consuming & lengthy process, and the fragmented nature of their financial & non-financial data.

“ULI is expected to significantly benefit agricultural and MSME borrowers by streamlining the lending process, improving access to credit, and enhancing financial inclusion,” he believed.

“ULI is aimed to provide financial and other related information (details like land records, etc.) from diverse sources readily available to various financial institutions who can access these information using APIs.”

This will allow rural and MSME borrowers to apply for credit from multiple lenders through a single platform. It can also provide borrowers with clear information about different loan products, interest rates, and terms offered by various financial institutions, helping them make informed decisions, the Director of Teamlease Regtech said.

This competitive environment will also encourage lenders to offer better interest rates, and other facilities supporting the growth and sustainability of both MSMEs and agriculture.

He said that ULI can further integrate various government schemes aimed at supporting these sectors and can be used for educational resources and tools.

Transformative future when combined with OCEN

Aman Kumar, Group CFO, Innoterra Group said, “When combined with the capabilities developed under the Open Credit Enablement Network (OCEN), ULI sets the stage for a transformative future where micro, small, and medium enterprises (MSMEs) and the agriculture sector can access seamless and instant credit.”

“These two sectors are among the largest employment generators in India, yet they often face significant challenges in securing timely and affordable credit. ULI, promises to bridge this gap by facilitating easier access to credit, enabling MSMEs and agricultural enterprises to thrive and contribute more robustly to the Indian economy.”

“As ULI evolves, it holds the potential to enhance financial inclusion, and drive economic growth by empowering these crucial sectors,” he added.

ULI will democratise credit reach

Rishabh Goel, Co-Founder & CEO of Credgenics said the ULI will democratise credit reach by bringing the unbanked and NTC segment under the umbrella of formal credit while simplifying the access for others.

“ULI’s ability to aggregate data insights from various sources will enable comprehensive credit assessments, fast track loan approvals - especially benefiting MSMEs and the agricultural sector. MSMEs will benefit from competitive interest rates and tailored financial products, which, in turn will support business growth and innovation.”

In agriculture sector, ULI will facilitate quicker loan disbursements, ensuring timely investments in farming inputs, stabilising output, and boosting productivity.

ULI will contribute to a more inclusive financial ecosystem, lowering credit acquisition costs and empowering millions to achieve their financial goals, contributing to national economic growth, he said.