New Delhi | When UPI was launched in 2016, few could have anticipated how profoundly it would reshape India’s payments ecosystem. What began as a simple digital transfer system has evolved into a global benchmark, reducing dependence on cash and fundamentally transforming financial inclusion, consumer behaviour, and business models.
Now, the next phase of this digital evolution is taking shape in the form of ULI (Unified Lending Interface)—widely viewed by experts as India’s next fintech revolution, aimed at bringing the same simplicity, speed, and scale to credit that UPI delivered to payments.
At its core, ULI is built on the principle of data-driven, instant, and verified lending. Instead of relying on traditional paperwork, borrower creditworthiness is assessed using real-time digital activity. This includes UPI transactions, FASTag toll payments, travel patterns, and GST-linked business data. The direct impact is significant: loan approvals that once took days or even weeks could now be completed the same day—sometimes within an hour, especially for working capital requirements.
Data Becomes the Collateral, Credit Arrives on Time
The ULI model is particularly relevant for micro, small and medium enterprises (MSMEs), gig workers, and the informal sector—segments that often lack traditional collateral or detailed balance sheets and are therefore excluded from formal banking channels.
For instance, a truck driver or small fleet operator’s toll payment frequency, route patterns, and UPI collections can serve as reliable indicators of income stability. Similarly, for small retailers and service providers, GST-linked transaction data offers a realistic picture of cash flows. Using such indicators, lenders can make more accurate risk assessments, enabling quicker loan approvals and potentially more rational interest rates.
A Critical Shift for the Ground-Level Economy
According to Shriram Finance Executive Vice-Chairman Umesh Revankar, platforms like ULI help lenders better understand the real needs of the ground-level economy.
He notes that in many cases, a timely, small working capital loan can be decisive—keeping a vehicle operational, sustaining supply chains, and stabilising a family’s livelihood. ULI, he argues, is uniquely positioned to recognise and act on this time value of credit.
Faster Disbursals, Lower Fraud Risk
One of ULI’s most significant advantages lies in greater transparency and verification efficiency. Since the data is drawn from authenticated digital trails, processes such as KYC, income assessment, and end-use verification become faster and more precise.
This not only accelerates credit disbursal, but can also help reduce non-performing asset (NPA) risks—a clear benefit for both lenders and borrowers.
A UPI-like Ecosystem for Lending
UPI’s success was anchored in a open, interoperable, and scalable infrastructure. ULI appears to be following the same philosophy, enabling banks, NBFCs, fintech firms, and regulators to operate on a shared digital layer.
If implemented in a balanced and inclusive manner, ULI could significantly narrow the long-standing credit gap faced by MSMEs, the gig economy, and the informal sector.
Data Privacy and the Role of Policy
That said, data-driven lending also raises critical concerns around data privacy, user consent, and cybersecurity. Experts stress that without a clear consent framework, purpose-limited data usage, and robust regulatory oversight, the model may not be sustainable in the long run.
Here, policymakers and regulators will play a decisive role—ensuring that innovation advances without compromising consumer protection.
