The Reserve Bank of India (RBI) announced an upcoming nationwide launch of the Unified Lending Interface (ULI) - a centralized public tech platform through which banks and financial institutions can offer loans to Indian customers after a quick credit check.
The Menace of Chinese Loan Apps in India
Ever since the advent of Covid-19 induced pandemic, Indian markets were flooded with China-based quick loan applications that targeted citizens from lower-income groups, luring them with prospects of easy loan dispersal. However, media and Indian investigative agencies noted that the apps operated without licenses and had predatory policies, such as short-term loans with high-interest rates. Victims were then harassed and threatened, sometimes leading to tragic outcomes such as suicides.
How ULI Can Help
According to the RBI, ULI will be developed based on the unified payments interface (UPI), which is India's instant digital payment system designed to seamlessly facilitate payments between banks and between customers and merchants. Currently, the data including credit scores of millions of customers in India is distributed among various public and private entities in different states. Through ULI, all data will be centralized so that financial institutions can check credit scores instantly and disperse loans. RBI states that ULI will serve as a verified and safe platform for all citizens to obtain various types of loans.
Conclusion
The introduction of ULI in the world’s most populous nation would be a significant step, given the Indian government’s efforts to promote the digitalization of services, including banking. The issue of predatory loan apps and their misuse of crypto exchanges also highlights the dangers of the crypto industry.
The launch of ULI can significantly enhance the security and transparency of credit operations in India and reduce the risks associated with predatory lending apps.
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