Reserve Bank of India (RBI) expanded the scope of Unified Payments Interface (UPI) by enabling transfer from credit lines at banks. UPI is a robust payments platform that handles 75 percent of the retail digital payments volume in India.
And currently, savings accounts, overdraft accounts, prepaid wallets and credit cards can be linked to this payment platform. It is noteworthy to mention here that UPI transactions hit a milestone of 10 billion transactions in August, reflecting 61 percent growth. The transaction amount during the same month hit ₹15.76 lakh crore, reflecting 47 percent year-on-year growth.
Now, the scope of UPI is being expanded by inclusion of credit lines as a funding account, RBI notification mentioned.
Now, 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 RBI has further stated that the banks may stipulate terms and conditions of use of such credit lines as per their board approved policy.
The terms may include among other things, credit limit, period of credit, rate of interest, etc.
The directive was issued under section 10(2) read with section 18 of the Payment and Settlement Systems Act, 2007.
The latest notification on Monday was issued in a follow-up action of the statement made by the banking regulator on April 6 under the title ‘Statement on Development and Regulatory Practices’.
In that statement, RBI had stated, “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, the 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.”
Prior to this, RuPay credit cards were permitted to be linked to UPI.