In a move that could completely transform how loans are approved in India, banks and financial institutions have been directed to reduce their reliance on CIBIL credit scores. Instead, they will now connect to a new system — the Unified Lending Interface (ULI) — to assess loan applicants more accurately, especially those who do not yet have a credit score.
Big Change in Loan Approvals
Traditionally, when someone applies for a loan from a bank or NBFC (non-banking financial company), their CIBIL credit score is checked first. This score has long been the standard measure of someone’s creditworthiness. But what about first-time borrowers who don’t have any credit history yet?
That’s exactly where ULI steps in.
The Department of Financial Services (DFS) under the Ministry of Finance has officially instructed all public and private sector banks — as well as NBFCs — to integrate with the ULI platform as soon as possible. The goal is to build a more inclusive and smarter loan assessment system that works for everyone — not just those already in the system.
How ULI Will Help
ULI is a digital public infrastructure that supports the full journey of a loan — from application to final repayment. It collects and analyzes real-life data like:
- Home or property ownership
- Daily expenses
- Farming data (for rural borrowers)
- Spending capacity
- Asset ownership
- Online purchase patterns
This allows even people with no formal credit history to be evaluated fairly for loans.
DFS Orders All Banks to Act
In a high-level meeting led by DFS Secretary M. Nagaraju and RBI Deputy Governor T. Rabi Shankar, top officials from 12 public sector banks, 18 private banks, 3 small finance banks, and 6 NBFCs came together to discuss ULI implementation.
Here are the key directives from the meeting:
- All institutions must appoint a nodal officer to oversee ULI usage.
- Monthly progress reports on ULI adoption must be submitted.
- Banks that haven’t yet joined ULI are being urged to move fast.
A New Era Beyond CIBIL
For over 25 years, Credit Information Bureau India Limited (CIBIL) has been the main player in India’s credit scoring system. But it mostly covers those who have already taken loans or used credit cards.
With ULI, the system becomes much broader. It will also include gig workers, small sellers, and first-time borrowers by linking with:
- E-commerce platforms
- Gig economy portals (like ride-hailing, delivery, freelance apps)
This will allow a new kind of credit score to be generated based on real-world digital behavior.
Final Thoughts
This change could be a game-changer for millions of Indians who are creditworthy but invisible to the traditional banking system. Whether you’re a first-time loan seeker, a farmer, or a gig worker — ULI may soon help you access loans more easily and fairly.