In yet another move to uplift the UPI, Reserve Bank of India (RBI) has allowed all Scheduled Commercial Banks (SCBs) to enable payments through a pre-sanctioned credit line for individuals, with prior customer consent, for transactions using the UPI (unified payments interface) system.
Now, UPI has been expanded by inclusion of credit lines as a funding account.
Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with prior consent of the individual customer, are enabled for transactions using the UPI System, the central bank said.
Banks may, as per their Board approved policy, stipulate terms and conditions of use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc.
The UPI system has been leveraged to develop products and features aligned to India’s payments digitisation goals. Recently, RuPay credit cards were permitted to be linked to UPI.
Presently, UPI transactions are enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments including wallets. It is now proposed to expand the scope of UPI by enabling transfer to/from pre-sanctioned credit lines at banks, in addition to deposit accounts.
In other words, UPI network will facilitate payments financed by credit from banks. This can reduce the cost of such offerings and help in development of unique products for Indian markets.
Marking its strong footprints, recently UPI crossed 10 billion transactions in month of August.
NPCI said the total transaction amount increased 47% year-on-year to Rs 15.76 lakh crore in August. In July, UPI transactions of 9.96 billion were recorded while the transaction amount stood at Rs 15.34 lakh crore.
