RBI has already allowed banks to provide overdraft to customers, which they can access through UPI. The permission to transfer funds from the credit line will now enable banks to structure loans like credit cards. The RBI governor said that UPI is a robust platform that handles 75% of retail digital payments in India.
UPI App: An important step has been taken through the Reserve Bank of India (RBI). Through this, RBI has allowed banks to transfer pre-approved credit lines through the UPI network.
Under this, even if a customer does not have money in his bank account, he will be able to pay money through UPI up to a limit. The measure will enable UPI services to act like credit cards and provide low value credit to around 300 million users of the payment platform.
RBI
RBI has already allowed banks to provide overdraft to customers, which they can access through UPI. The permission to transfer funds from the credit line will now enable banks to structure loans like credit cards. Announcing the move, RBI Governor Shaktikanta Das said that UPI is a robust platform that handles 75% of retail digital payments in India.
UPI Detail
Das said, “RuPay credit cards were allowed to be linked to UPI. Currently UPI transactions are enabled between deposit accounts in banks, sometimes intermediated by prepaid instruments, including wallets. Now It is proposed to expand the scope of UPI by enabling transfers from among pre-sanctioned credit lines in banks.”
Credit Card
Bankers said the success of the new product would depend on whether the new rules allow banks to structure short-term loans similar to credit cards by providing interest-free credit for 30 days and reward points for transactions as customers Credit cards are the most attractive features for.
UPI payment
However, credit cards can provide these facilities as they charge a fee from the merchant. The advantage of UPI over credit cards is that banks do not need to sign up new users as they can offer credit to existing customers. Banks also do not have to spend on issuing cards, signing up merchants or installing swipe machines.
