View: India needs more lending — but not to everyone
digital transactions are fairly seamless. Now, the Reserve Bank of India wants to expand the country’s unified payments interface, or UPI, to lending: The central bank’s governor has repeatedly promised that a “unified lending interface” will soon be rolled out. That carries great potential — and not a little risk.
India’s model for financial interconnectedness is based around what it calls “digital public infrastructure.” The idea is simple: The government, or a closely regulated quasi-public entity, invests in, manages, and pays for the system through which digital transactions take place. Businesses can create apps that use this infrastructure; interoperability is built in, so those apps must compete on cost and quality rather than on the size of their network.
Consumers can decide how much of their information they are willing to share with specific apps or for specific transactions, and theoretically the seller’s access to private data is neither permanent nor very deep. The Indian IT whizzes who designed the system insist it avoids the worst of the US model (which is fragmented, insecure, and expensive), European systems (which are overregulated, lecture to business, and stifle innovation) and the Chinese network (which does not privilege privacy or allow for accountability to civil society).
Quite a bit of information has been put on India’s UPI, from educational certificates and medical history, to land records. Now that instant payments linked to bank accounts have been in use for years, there’s also a
