The Reserve Bank of India (RBI) has said the UPI system will also include pre-sanctioned credit lines issued by banks for transactions. Earlier, only the deposited amount could be transacted through the UPI system.
In April, the RBI proposed to expand the scope of the Unified Payments Interface (UPI) by enabling transfer to/from pre-sanctioned credit lines at banks.
“As announced, the scope of UPI is now being expanded by the inclusion of credit lines as a funding account,” the RBI said in a circular on Monday, September 5.
UPI Pre-Sanctioned Credit Line
In the circular on ‘Operation of Pre-Sanctioned Credit Lines at Banks through UPI’, the RBI said: “Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with the prior consent of the individual customer, are enabled for transactions using the UPI System.”
Banks may, as per their board-approved policy, stipulate terms and conditions for the use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc, it said.
Currently, savings accounts, overdraft accounts, prepaid wallets and credit cards can be linked to UPI. “The scope of UPI is now being expanded by the inclusion of credit lines as a funding account,” the RBI said.
Under this facility, 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.
The RBI in April proposed to expand the scope of UPI by enabling transfer to / from pre-sanctioned credit lines at banks, in addition to deposit accounts.
Earlier, RuPay credit cards were also permitted to be linked to UPI.
UPI, used for immediate money transfer through mobile devices round the clock, transactions crossed the 10-billion-mark in August. The number of UPI transactions in July was 9.96 billion (996.4 crore) and 9.33 billion in June.
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