RBI Governor Proposes Allowing Pre-Sanctioned Credit Lines Via UPI: What It Means For You

The governor of the Reserve Bank of India (RBI), Shaktikanta Das, proposed expanding the scope of the Unified Payments Interface (UPI) by allowing banks to operate pre-sanctioned credit lines through UPI. Announcing the bi-monthly monetary policy, Das stated that this initiative would encourage innovations.

What Happened? “We have been making a lot of announcements relating to UPI in past policies to widen and expand the footprint of UPI even further. UPI's robustness has been leveraged to develop new products and features from time to time,” said the RBI governor on Thursday.

Previously, credit through UPI was only available to customers who wished to avail of an overdraft facility on their savings or current bank account linked to UPI. However, several fintech firms have been offering credit via UPI, enabling customers to borrow instantly by scanning a QR code.

See also: Nikhil Kamath Says Indians Realize True Value Of UPI After Visiting Western Countries: ‘Tables Are Turning’

In September 2022, the National Payments Corporation of India (NCPI) also launched UPI via credit cards on the RuPay network.

The RBI’s move is expected to increase the ticket size of UPI transactions since customers usually use credit cards for more significant spending than their debit accounts. Currently, about 50% of UPI transactions are less than ₹200.

Image by International Monetary Fund on Flickr

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Posted In: GovernmentRegulationsRBIShaktikanta DasUPI