CBDC and ULI make further inroads; state govts show increasing interest: RBI Dy Governor Rohit Jain
The Reserve Bank of India noted continuing expansion of the Central Bank Digital Currency (CBDC) and the Unified Lending Interface (ULI), with growing participation from state governments
Twelve states have digitised their land records to enable integration with digital lending platforms, with more states in the process of doing so
Digitised land records allow lenders consent-based digital access to a borrower's land-ownership data, reducing paperwork and processing time for loans, particularly for farmers and small borrowers
The developments were highlighted as part of the RBI's ongoing push to expand India's Digital Public Infrastructure (DPI) stack
Central Bank Digital Currency (CBDC) — the Digital Rupee (e₹)
CBDC is a digital form of sovereign currency issued directly by the central bank, distinct from private cryptocurrencies (which are not legal tender) and from existing digital payment systems like UPI (which move commercial bank money, not central bank money). The RBI's Digital Rupee (e₹) is issued and backed by the RBI itself, carrying the same legal tender status as physical currency.
Key Details
- Two variants: Wholesale CBDC (e₹-W), piloted from 1 November 2022 for interbank settlement of government securities transactions; Retail CBDC (e₹-R), piloted from 1 December 2022 for general public use in a closed user group
- e₹-R initially covered select cities (including Mumbai, New Delhi, Bengaluru, Bhubaneswar, and Chandigarh) before wider rollout
- Distinguished from cryptocurrency: CBDC is a central bank liability with legal tender status; private cryptocurrencies have no sovereign backing and are not recognised as legal tender in India
- Falls under the RBI's mandate as the sole currency-issuing authority under Section 22 of the RBI Act, 1934
The RBI's reference to CBDC "making further inroads" reflects continued expansion of e₹ use cases beyond the initial pilot phase, with state governments emerging as adopters/facilitators of the broader digital public infrastructure ecosystem that CBDC is part of.
Unified Lending Interface (ULI)
ULI is a digital public infrastructure platform, conceived on the lines of the Unified Payments Interface (UPI), that gives lenders consent-based digital access to a borrower's financial and non-financial data — including land records, income data, and credit history — stored across scattered databases, to enable faster, "frictionless" credit appraisal and disbursal, especially for farmers and MSMEs.
Key Details
- Piloted by the RBI starting 2023; national rollout announced by the RBI Governor at the "RBI@90" Global Conference on Digital Public Infrastructure in Bengaluru on 26 August 2024
- Aggregates data such as land records, satellite data, PAN, and account aggregator information through open APIs, with a "plug and play" model connecting multiple lenders and data sources
- Primary target segments: agricultural credit (linking land records to enable faster Kisan Credit Card-type disbursals) and MSME credit
- Complements the Account Aggregator (AA) framework regulated by the RBI, which similarly enables consent-based sharing of financial data between institutions
State-level land record digitisation is a prerequisite for ULI to function for agricultural lending — a state's land records must be in a digitally verifiable form before a lender can query them through ULI, which explains why the RBI is tracking state-wise progress (12 states so far) as a marker of the platform's operational readiness.
Digital Public Infrastructure (DPI) — the "India Stack" Approach
DPI refers to foundational, interoperable digital systems built as public goods that private and public entities can build services on top of — as distinguished from a single government platform or purely private-sector infrastructure. India's DPI stack layers identity (Aadhaar), payments (UPI), and data-sharing consent (Account Aggregator, ULI) to enable broad-based financial inclusion.
Key Details
- Commonly described using the "identity-payments-data" layer framework: Aadhaar (identity) to UPI (payments) to Account Aggregator/ULI (data-empowerment)
- CBDC and ULI are both cited internationally (including by the G20 under India's 2023 presidency) as examples of India's DPI model being studied for adoption by other developing economies
- State government participation (e.g., land record digitisation) reflects a Centre-state coordination dimension of DPI rollout, since land records are a state subject under the Constitution (Entry 18, State List)
The Deputy Governor's remarks about growing state interest in CBDC and ULI situate this as a governance/federalism story as much as a technology one — land being a state subject, DPI-linked credit expansion for farmers depends on voluntary cooperation from state governments to digitise records.
- States that have digitised land records for integration with digital lending platforms: 12 (as of the report), with more in progress
- CBDC wholesale pilot (e₹-W) launched: 1 November 2022
- CBDC retail pilot (e₹-R) launched: 1 December 2022
- ULI piloted from 2023; national rollout announced 26 August 2024 at the RBI@90 Global DPI Conference, Bengaluru
- Land is a State List subject under the Constitution (Entry 18, List II, Seventh Schedule), making state cooperation necessary for nationwide ULI coverage
- CBDC's legal basis: RBI's currency-issuing authority under Section 22 of the RBI Act, 1934