Credit Line on UPI: RBI allows small finance banks to offer credit lines to customers
Credit line on UPI has the potential to make available low-ticket, low-tenor products to new-to-credit customers. SFBs leverage a high-tech, low-cost model to reach the last-mile customer and can play an enabling role in expanding the reach of credit on UPI.
The Reserve Bank of India (RBI) today, December 6 decided to keep the policy rate unchanged for the 11th time in a row.
However, it cut the cash reserve ratio (CRR) for banks by 0.5 per cent to make more funds available for lending to spur economic growth, and sharply lowered the GDP growth forecast to 6.6 per cent for the current fiscal.
In its last monetary policy meeting of the year today, RBI announced that it has allowed small finance banks to offer the credit line on Unified Payment Interface (UPI).
When was the credit line on UPI launched?
Launched in September 2023, credit ine on UPI was earlier made available to only scheduled commercial banks.
What is the credit line on UPI?
“Credit line on UPI has the potential to make available low-ticket, low-tenor products to ‘new-to-credit’ customers. SFBs leverage a high-tech, low-cost model to reach the last-mile customer and can play an enabling role in expanding the reach of credit on UPI. It is, therefore, proposed to permit SFBs to extend pre-sanctioned credit lines through the UPI. Necessary guidelines will be issued shortly," according to the RBI press release.
How to link credit lines on UPI?
- Download UPI app from Google Play store.
- Complete registration and select credit line as an option.
- Basis the mobile number update with your issuing bank, masked available Credit Line will appear on the screen.
- Select the Credit Line account which you want to link and confirm.
- Proceed to generate UPI PIN.
In another development on December 4, RBI increased the UPI Lite wallet limit to Rs 5,000 and the per-transaction limit to Rs 1,000 to encourage wider adoption of the popular instant payment system through mobile phones.
The Reserve Bank on Wednesday amended the 'offline framework' issued in January 2022 with an aim at facilitating small value digital payments in offline mode.
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