According to the RBI, Scheduled Commercial Banks (SCBs) can now permit payments using a pre-approved credit line for individuals for transactions made utilizing the UPI (unified payments interface) system with prior customer agreement. According to a circular sent to SCBs (with the exception of Payment Banks, Small Finance Banks, and Regional Rural Banks), this expands the use of UPI by adding credit lines as a funding account.
In its statement on development and regulatory plans from April 6, 2023, the central bank stated that it would broaden the use of UPI by authorizing transfers to/from pre-approved credit lines at banks. Currently, UPI can be linked to savings accounts, overdraft accounts, prepaid wallets, and credit cards.
Banks may, as per their board-approved policy, stipulate terms and conditions for use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc.
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(With inputs from IANS)
