New Delhi: UPI system is used for fast transactions and payments across the country. Till now, only deposits could be transacted through it, but now the facility of pre-approved loan through UPI has also been started. To increase the access of credit line to the people, RBI has approved it.
Able to take pre approved loans through UPI
UPI is a robust payment platform that supports a wide range of features.
The Reserve Bank of India (RBI) has said that the Unified Payments Interface (UPI) system will also include pre-approved credit lines issued by banks for transactions. The Reserve Bank has proposed to expand the scope of the Integrated Payment Interface (IPI) interface by enabling transfers from pre-approved credit lines in banks. Explain that currently savings accounts, overdraft accounts, prepaid wallets and credit cards can be linked to UPI.
In a circular regarding operation of pre-approved credit lines in banks through UPI, the Reserve Bank said that the scope of UPI is now being expanded to include credit lines as a funding account. RBI said that under this facility, payment can be made using the UPI system through a pre-approved credit line issued by a listed commercial bank with the prior consent of the individual customer.
The RBI said banks may determine the terms and conditions for the use of such credit lines as per their board-approved policy. The terms may include, among other items, credit limit, credit tenure and interest rate, etc. This will reduce the cost of credit.
UPI is a robust payment platform that supports a wide range of features. It currently handles 75% of retail digital payments in India. The UPI system has been leveraged to develop products and features in line with India's digital payments target. Recently permission was given to link RuPay credit card with UPI. Currently UPI transactions take place between deposit accounts in banks.
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