After UPI, India readies ULI: Can a new digital rail finally democratise credit?

The next major advancement in digital finance might be imminent. During a visit to the State Bank of India organised by the World Savings and Retail Banking Institute (WSBI), Reserve Bank of India (RBI) Deputy Governor Swaminathan J mentioned that the country is creating a new digital layer called the Unified Lending Interface (ULI).

This aims to apply the principles of openness and interoperability to credit markets. "Just as Unified Payments Interface (UPI) made payments universal, ULI has the potential to mark a turning point in how affordable credit is accessed and delivered at scale."

The Deputy Governor explained that the new system aims to do for loans what the UPI did for digital payments. The goal, he added, is to make borrowing simple, transparent, and inclusive, allowing even small borrowers and micro-entrepreneurs to access formal lending channels easily.

Swaminathan noted that UPI remains the “flagship success story” in India’s digital inclusion journey. “By integrating multiple accounts into a single mobile platform, UPI has revolutionised retail payments,” he said.

But he warned that while payment innovations have transformed everyday transactions, the next challenge is expanding access to credit. He emphasised that this is where ULI could make a difference — by bridging the gap between technology and affordability.

The Deputy Governor highlighted that the comprehensive digital public infrastructure, anchored by the India Stack, serves as the foundation for these innovations.

“At the core of this framework is the India Stack — a collection of interoperable, open, and scalable digital layers designed as public goods,” he stated.

Initiatives such as Aadhaar, DigiLocker, and the Account Aggregator framework have facilitated identity verification and secure data exchange, expanding new lending possibilities.

Swaminathan also emphasised that the rapid growth of fintechs, digital platforms, and embedded finance models has broadened the scope of the financial system and introduced new kinds of risks. "These are not simply traditional risks in digital form, but new frontiers arising from algorithmic decision-making, heavy dependence on data, concentration of services in a few platforms, and deep technological interconnections."

However, Swaminathan carefully emphasised that technology alone cannot ensure financial inclusion. “Achieving this requires more than technology; it demands products suited to diverse needs and limitations, supported by human interfaces that foster trust and confidence,” he said.

He also linked the development of ULI to the central bank's broader goal of responsible innovation, supported by sandboxes and strong risk management frameworks.

“As we look ahead,” Swaminathan said, “there is growing recognition worldwide that digital innovation is the most powerful driver of financial inclusion.  India’s journey shows that access is only the first step—the true test lies in meaningful usage, in the quality of services, and in the trust that people place in the system.”

With ULI, India may once again demonstrate that innovation and inclusion, when combined, can transform not just payments but also the way credit reaches those who need it most.