Unified Lending Interface will be launched by RBI to provide 'frictionless credit

Current Context: The Reserve Bank of India (RBI) is introducing the Unified Lending Interface (ULI) to streamline credit flow, particularly for small and rural borrowers.

• ULI is a digital platform designed to facilitate seamless credit transactions by reducing expenses, expediting fund distribution, and enhancing scalability.
• Here are the key points about ULI:
• Purpose: ULI aims to cater to the significant unmet credit demand across various sectors, with a specific focus on agricultural and medium, small, and micro-enterprises (MSME) borrowers.
• Digital Integration: Given India’s rapid digitalization, ULI integrates data from various entities such as central and state governments, account aggregators, banks, credit information bureaus, and digital identity authorities. It digitizes access to customer financial and non-financial data that were previously stored in separate systems.
• Frictionless Credit: By providing a consent-based flow of digital information, ULI reduces the time taken for credit appraisal, benefiting borrowers.
• Similar to UPI: RBI Governor Shaktikanta Das expects ULI to play a transformative role in the lending space, similar to how UPI revolutionized payments.

Question:

1 How does Unified Lending Interface (ULI) launched by RBI primarily reduce the time taken for credit appraisal?

• A) By automating decision-making with AI
• B) By providing a consent-based flow of digital information
• C) By eliminating credit checks
• D) By integrating blockchain technology

Answer: B) ULI reduces the time taken for credit appraisal by allowing a consent-based flow of digital information, which streamlines the process of accessing customer data, making credit evaluation faster.