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RBI allows pre-sanctioned credit lines through UPI
September 05, 2023
The Reserve Bank of India (RBI) enabled transactions to or from pre-sanctioned credit lines at banks through the Unified Payments Interface (UPI) System, the central bank announced on Monday. As of now, only savings account, overdraft account, prepaid wallets and credit cards could be linked to UPI.
“As announced, the scope of UPI is now being expanded by inclusion of credit lines as a funding account,” the bank said in a circular titled ‘Operation of Pre-Sanctioned Credit Lines at Banks through UPI’.
“Under this 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 further stated.
The RBI, in April, suggested to expand the scope of the UPI with inclusion of credit lines in addition to deposit accounts, which will further help in reduction of cost of such offerings and help in development of unique products for Indian markets.
UPI, used for immediate money transfer through mobile devices round the clock, transactions crossed the 10-billion-mark in August. The number of UPI transactions in July was 9.96 billion (996.4 crore) and 9.33 billion in June.
Introduction of credit lines in UPI transactions is set to help not just the banks but also businesses and consumers.
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