India’s financial ecosystem has been reshaped by the Unified Payments Interface (UPI), which turned a fragmented payments landscape into a seamless, real‑time network used by billions. As the country moves toward deeper financial inclusion, policymakers and fintech innovators are now eyeing the next evolution – a Unified Lending Interface (ULI). This proposed digital layer would harness the massive data generated by UPI transactions to create a more transparent, efficient, and inclusive credit‑allocation system. In this article, we explore how ULI could build on UPI’s success, the technological and regulatory challenges it faces, and the potential impact on borrowers across the economic spectrum.
Unified payments interface: the foundation
Since its launch in 2016, UPI has become the backbone of India’s digital economy. By enabling instant bank‑to‑bank transfers through a single mobile application, it has driven a surge in both transaction volume and value. According to the latest figures, UPI processed 13.4 billion transactions worth ₹19.5 trillion by September 2025, up from 8.5 billion transactions in 2022. This growth not only reflects consumer adoption but also creates a rich data repository that can be leveraged for credit assessment.
| Year | Transactions (billion) | Value (trillion INR) |
|---|---|---|
| 2022 | 8.5 | 12.3 |
| 2023 | 10.2 | 14.8 |
| 2024 | 12.1 | 17.6 |
| 2025 (as of Sep) | 13.4 | 19.5 |
Unified lending interface: concept and design
The ULI aims to standardise the way lenders access consumer financial data, mirroring UPI’s open‑API model. By providing a single, secure gateway, it would allow banks, non‑bank financial companies (NBFCs), and fintech platforms to retrieve real‑time transaction histories, cash‑flow patterns, and repayment behaviours. This uniform data layer could dramatically reduce the time required for loan underwriting—from weeks to minutes—while improving risk assessment accuracy.
Data synergy and credit underwriting
Integrating UPI data into credit models unlocks several advantages:
- Behavioural insights: Continuous transaction streams reveal spending habits, income regularity, and financial resilience.
- Alternative scoring: For borrowers lacking traditional credit histories, UPI footprints can serve as a proxy for creditworthiness.
- Dynamic risk monitoring: Lenders can adjust credit limits in real time based on changes in cash flow.
These capabilities promise to widen access for underserved segments, particularly micro‑entrepreneurs and gig workers who have historically been excluded from formal credit channels.
Regulatory landscape and challenges
Implementing ULI requires a coordinated effort between the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI), and data‑privacy regulators. Key considerations include:
- Data security: Ensuring that consumer consent mechanisms are robust and that data sharing complies with the Personal Data Protection Bill.
- Standardisation: Defining common APIs and data schemas to avoid fragmentation.
- Competition: Balancing open access with safeguards against monopolistic practices by large fintechs.
Early pilot projects, such as the RBI’s “Digital Credit Registry”, are testing these frameworks, but scalability remains a critical hurdle.
Future outlook and impact on financial inclusion
If successfully rolled out, ULI could transform India’s credit ecosystem. By leveraging the ubiquitous reach of UPI, lenders could extend affordable credit to millions of previously unbanked individuals, fostering entrepreneurship and consumption. Moreover, the real‑time nature of the platform would promote responsible lending, reducing default rates and enhancing overall financial stability. Stakeholders are watching closely, as the convergence of payments and lending may set a global benchmark for digital finance integration.
In summary, the Unified Lending Interface represents the logical next step after UPI’s triumph, promising a more inclusive, data‑driven credit market. Its realization will hinge on thoughtful regulation, robust technology, and collaboration across the financial sector.
Image by: Liliana Drew
https://www.pexels.com/@liliana-drew
