ULI coupled with UPI to fuel Next Generation Lending in India

16.7 billion* transactions in month  of December 2024!! this is exactly how UPI ( unified payments interface ) is transforming payments in India. UPI transactions volume grew at CAGR of 129% and UPI transactions value grew at CAGR of 138% from FY 2017-18 to FY 2023 -24. UPI now facilitates transactions even outside India in key markets such as UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, and Mauritius. This transformational growth is made possible by  secure , flexible , diverse, and importantly accessible nature of UPI which was further supported by government initiatives, regulatory environment and increased smartphone and internet penetration.

NPCI’s ( National Payments Coorporation of India ) introduction of credit line on UPI allowing access to pre sanctioned credit line from banks linked to UPI accounts has already opened up the lending opportunity. This allows Banks , NBFCs, PSPs to create credit based lending products which can become integral part of purchase journey for users. In fact  this allows Fintechs to  come up with innovative ideas to democratise credit lines through technology making it seamless to pay using credit lines. If this takes off , credit lines made available through Apps will plug the huge gap we have in credit card ownership in rural areas vs Urban areas. It can even become  an alternative to  Low value credit cards in urban areas too. Also it can bring down the cost of transactions processing comapred to credit cards, making it lucrative for the merchants as well as consumers. Democratised Credit lines coupled with UPI brings in advantages of access to existing huge customer base, Infrastructure to process transactions, and also close the loans through repayment and renew the credit lines.

Revolutionising payments through UPI with resounding success, Reserve bank of India ( India's Central Bank ) is all set to launch Unified Lending Interface (ULI)  to transform lending space  in India. ULI is technological platform  and infrastructure to aggregate data from multiple sources and disburse to banks and non-banking financial companies in the lending business. This will transform the lending ecosystem by making lending evaluation seamless , secure and accessible across retail , MSME , micro borrowers and even individuals  and there by democratise lending. This will address the huge credit gap prevalent especially in the unorganised and rural sectors.

There will be cross platform sharing of information between UPI and ULI   which will mutually  bolster payments and lending space with endless possibilities limited only by innovation. For e.g. Credit lines in UPI can strengthened in terms of coverage and value based on the information on lending assessment from ULI and ULI assessment can leverage the payments data from UPI.

With ULI set to be launched soon, the year 2025  is going to be year of lending landscape transformation and a booster for payments space in India with huge opportunities.

Source* : https://www.npci.org.in/statistics/monthly-metrics