Soon, UPI will allow borrowers to access digital credit lines from banks

The Reserve Bank of India (RBI) has allowed operation of pre-sanctioned credit lines at banks through Unified Payments Interface (UPI). RBI Governor Shaktikanta Das made this announcement while announcing the decisions of bi-monthly monetary policy committee meeting on April 6,2023. "Scope of UPI to be expanded, by permitting operation of pre-sanctioned credit lines at banks, through UPI. This will further encourage innovation," said Das.

"At present, UPI transactions are enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments including wallets. 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, UPI network will facilitate payments financed by credit from banks," RBI said.

"The RBI's forward-thinking decision to allow pre-sanctioned credit lines at banks to be accessible through UPI will drive innovation and revolutionise the way customers access credit. We believe this is a significant step towards a more efficient and digital banking ecosystem and will undoubtedly provide a much-needed boost to the industry. The ability to access pre-sanctioned credit lines through UPI will prominently help in reduction of the time and effort required for customers to secure loans, ultimately driving economic growth and development," Rajsri Rengan, India Head of Development, Banking and Payments, at FIS.