RBI Big announcement: The Reserve Bank of India (RBI) on 4 September enabled Unified Payments Interface (UPI) transactions from pre-approved credit lines from banks.
RBI Big announcement: The Reserve Bank of India (RBI) has enabled transactions through pre-approved credit lines through Unified Payments Interface (UPI). Under this initiative, individuals can make payments using pre-approved credit lines issued by scheduled commercial banks, provided they have the prior consent of the individual customer.
This means that individuals who do not have a traditional credit card can now avail credit facilities easily by linking their funding accounts with UPI.
understand the new decision
Traditionally, credit cards have been the primary means of accessing digital credit. However, the latest announcement by RBI will empower banks to offer credit products that are equipped with credit card features, but without the need for physical credit cards or machines.
This step is especially important. Earlier credit cards were allowed on UPI Rail, but it was limited to RuPay settlement system. It was not widely adopted by private sector banks. This was because most of the credit cards of these banks operate on Visa and MasterCard settlement systems.
However, the introduction of pre-approved credit lines has completely changed the game, enabling private sector banks to offer credit-like products to anyone who has a UPI relationship with the bank.
What is the benefit?
There are many benefits for the customers. Firstly, it would reduce the number of cards that people had to keep on hand. Now there is nothing to fear, will simplify their financial life.
Secondly, it facilitates transactions through UPI, thereby reducing the time and effort required to secure loans and access credit. This seamless integration of credit lines into the UPI system will enhance financial inclusion and provide greater flexibility to consumers.
