A new trinity in digital lending space

Three platforms in the lending space are poised to change the way lenders offer credit and borrowers access funds in India:

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There were 2 crucial milestones in India's credit market in the last couple of yea years the launch of Open Network for Digital Commerce, or ONDC, in April 2022 and that of Open Credit Enablement Network, or OCEN, earlier in July 2020. While ONDC is intended to help small businesses and improve the online shopping experience, OCEN, which was part of India Stack, was aimed at improving access to credit for MSMEs in the country. Both these open networks are aimed at creating a partnership environment for lending institutions and ensure that credit is available mainly to the underserved areas of the market.

Now comes a third and pivotal moment. The Reserve Bank of India in August this year has indicated that it may launch a Unified Lending Interface, or ULI, a digital platform intended to facilitate the creation of a smooth lending infrastructure at the national level. The central bank hopes the ULI will ease the lending process, particularly for rural people and MSMEs.

Announcing the regulator's intention, Governor Shaktikanta Das said 'Just like UPI transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India'.

The ULI platform is now functioning as a pilot.

MSME TO BENEFIT

It will be beneficial to have a closer look at the 3 platforms to understand their effective roles in the credit management and disbursal, especially among the MSMEs in the country.