RBI MPC Policy: Central bank allows credit cards to be linked with UPI platform - What does it mean for customer?

With an aim to enable more people to make payments using the digital payments platform, the Reserve Bank on Wednesday allowed credit cards to be linked with the unified payments interface (UPI), starting this facility with Rupay cards.  

At present, UPI facilitates transactions by linking savings or current accounts through users' debit cards.

"It is proposed to allow linking of credit cards to UPI," RBI Governor Shaktikanta Das said while announcing the regulatory moves, along with the bi-monthly policy review. 

He said that to start with Rupay credit cards issued by the RBI-promoted National Payments Corporation of India (NPCI) will be enabled with this facility, and the facility will be made available after system developments. 

Das said the new arrangement is expected to provide more avenues and convenience to the customers in making payments through the UPI platform. 

UPI has become the most inclusive mode of payment in India, with over 26 crore unique users and 5 crore merchants onboarded on the platform, he added. 

In May, 594.63 crore transactions amounting to Rs 10.40 lakh crore were processed through UPI, Das said. 

The interoperability of prepaid payment instruments (PPIs) has also facilitated access of PPIs to the UPI payment system for undertaking transactions, Das said. 

While speaking exclusively to Zee Business Managing Editor Anil Singhvi, SBI Chairman Dinesh Khara welcomed this move of linking credit cards to UPI platforms and said the repo rate hike was in accordance with the market as controlling inflation is important for the economy’s growth. 

The central bank on Wednesday raised the interest rate by 50 basis points to a two-year high of 4.9 per cent as it doubled down to tame inflation that has surged in the last couple of months. The rate hike comes on the back of a 40 bps increase effected by RBI at an unscheduled meeting on May 4.