In the recently announced MPC meeting, the RBI Governor Shaktikanta Das expanded the scope of UPI by allowing operations of pre-sanctioned credit lines by banks through UPI.
“It is now proposed to expand the scope of UPI by permitting operation of pre-sanctioned credit lines at banks through the UPI. This will further encourage innovation,” the governor said.
At present, UPI transactions are allowed only between deposit accounts at banks and occasionally, using pre-paid instruments such as wallets. However, now it is proposed to transfer pre-sanctioned credit lines at banks, along with using the deposit accounts. It simply means that the UPI network will facilitate payments financed by credit from banks. This move is rejoiced by experts, as this will expand the scope of UPI.
SBI Ecowrap stated this move will enable SMEs to access credit in a hassle-free manner and enhance micro-credit apart from revolutionizing the way customers access to credit. These kinds of initiatives can help fill a gap of 20 to 25 lakh crore rupees in the credit system for MSMEs.
The National Payment Corporation of India has been introducing a slew of measures in the payment space. Last month, the NPCI had collaborated with payment aggregators to activate merchant transactions through RuPay credit cards on UPI. Through this linkage, NPCI aims at ensuring customers no longer have to carry their credit cards with them for payments.
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