The Reserve Bank of India (RBI) on Monday asked banks to start providing a pre-sanctioned credit line on Unified Payments Interface (UPI) to customers in a move that would expand the scope of the UPI payment system.
“Currently, savings account, overdraft account, prepaid wallets and credit cards can be linked to UPI. As announced, the scope of UPI is now being expanded by inclusion of credit lines as a funding account,” the central bank said in a statement.
Under the facility, 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, it added.
This means that if a customer has a pre-approved credit line of, says Rs 50,000, then it may be able to use it as a loan for payments (loan) on UPI. UPI transactions are enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments (PPI) including wallets.
Banks will stipulate the terms and conditions of use of such credit lines, including credit limit, period of credit, rate of interest, etc.
Edited by Kanishk Singh
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