How the Unified Lending Interface (ULI) could do for loans what UPI did for payments.

Why getting a loan is still slow, what ULI changes, and the risks worth watching.

In 2020 I was working to develop a UPI client like Paytm that had the functionality of lending. Users could get business loans, personal loans, etc. I have used UPI, and I can say this is the best thing I have ever seen in the digital payment environment. I wish I could say the same for lending. While I was analyzing the lending process to create products, I realized that the lending process is long, tedious, and really frustrating.

There was no way to accelerate or make that process because each process was important and required authentication and verification that took its own time. Just like UPI solved the payment problem, something needs to be done to solve this huge problem of lending.

UPI — Financial revolution at scale.

In 2016, the NPCI launched Unified Payments Interface (UPI), which transformed the payment ecosystem. Whether it’s just 1 rupee or 1 lakh, all payments were possible in a matter of seconds.

NPCI recorded 24.51 billion UPI transactions worth ₹29.82 lakh crore in August 2026.

But, when I ask myself, what comes after UPI?

The Painful Slow Process

Lending is a very complex process as compared to the payment. In peer-to-peer payment, information usually travels from one peer to the bank and then to the peer, and transactions are completed. But, when it comes to lending, the whole scenario changes.

Banks want to give loans to anyone who can pay; that is the first condition for a loan. They need to verify several documents to cross-check the background, identity, and financial history of the person before making any decision.

Suppose a small shopkeeper applies for a loan. The traditional lending process will look like this:

The shopkeeper may spend 38 days before he gets the loan. Sometimes, his application may get rejected or delayed. Eventually he may be forced to borrow from an informal lender.

The lender has to verify all the information provided by the borrower through different systems, departments, and databases. The major problem is that the same data is being asked for every time he applies for a loan, while that data already exists digitally.

The shopkeeper has a genuine problem. All user-related data is fragmented. The credit report is sitting somewhere else, PAN pulls financial records separately, and user identity data is pulled from Aadhaar.

Unified Lending Interface (ULI)

ULI allows consent-based data to flow from multiple data providers to lenders. This will make borrower information verification faster and more efficient.

Unified Lending Interface (ULI) is an enterprise-grade platform that connects lenders and data service providers through a standardized, protocol-based open application programming interface (API) framework operating on a plug-and-play model.

- RBiH Annual Report 2024–2025

It enables lenders to access a wide range of digital, financial, non-financial, and alternative data, along with various services from multiple data service providers through a single, unified interface. It eliminates the need for multiple bilateral integrations and streamlines credit assessments and decision-making processes.

Now the same shopkeeper applies through ULI.

Note: These figures are my estimates for illustrative purposes. RBIH hasn’t published turnaround figures.

As of March 2025, more than ₹60,000 crore has been disbursed, and 64 lenders per the December 2025 RBI report as reported by Medianama.

- RBiH Annual Report 2024–2025, Pg. no. 14

A shopkeeper’s loan can be rejected due to a lack of certain financial records. A large section of unorganized shopkeepers, traders, vendors, and self-employed individuals have borrowing requirements. Not all of them fit in banks’ lending criteria due to irregular income and lack of conventional financial data. This is the credit blind spot that ULI is trying to address.

The Risk Factor

Let’s not overlook the risks involved. RBI can simplify the rules and can create infrastructure to streamline the multiple verification processes. But there are certain risks and challenges ULI will need to address:

1. Thin data. A vendor who works in cash leaves a small digital trail, and ULI can only deliver data that exists.
2. Consent that nobody reads. ULI runs on consent, and consent is a screen. Normal user behavior is if they see the same action multiple times, they just click on it in order to move to the next step. How many people actually read all the terms and conditions while they apply for a loan? If a borrower doesn’t understand what they’re sharing, the consent is only formal.
3. Faster isn’t always better. Predatory loan apps already exist. A loan approved in minutes can become a debt trap within months.

Where the Overthinking Lands

Back then I often encountered 10 to 15 steps for the loan application process. The lending process was slow, lengthy, and tedious. I had to go through all the processes of verification and document submission, making it costly and time-consuming. That’s when I realized that lending needed its own UPI. An integrated protocol allowing lenders to connect with borrowers’ information digitally could seriously change the lending market.

The success of ULI will depend on whether a shopkeeper like him no longer waits 38 days.

Originally published at https://letoverthinkit.substack.com on October 1, 2026.

How the Unified Lending Interface (ULI) could do for loans what UPI did for payments. was originally published in Bootcamp on Medium, where people are continuing the conversation by highlighting and responding to this story.