Credit line on UPI: Now you can get it from small finance banks too
Reserve bank of India (RBI) has announced that it has allowed small finance banks to offer the credit line on Unified Payment Interface (UPI) in its monetary policy meet (MPC) held on December 06 2024.
Credit line on UPI was launched in September 2023 and was made available to scheduled commercial banks, it has now been decided to permit small finance banks to sanction credit line on UPI, the RBI stated.
This move will further deepen financial inclusion and enhance formal credit particularly for new to credit customers.
According to the RBI press release, “Credit line on UPI has the potential to make available low-ticket, low-tenor products to ‘new-to-credit’ customers. SFBs leverage a high-tech, low-cost model to reach the last mile customer and can play an enabling role in expanding the reach of credit on UPI. It is, therefore, proposed to permit SFBs to extend pre-sanctioned credit lines through the UPI. Necessary guidelines will be issued shortly.”
Adhil Shetty, CEO of Bankbazaar.com said, «The central bank has extended the credit line to small finance banks (SFBs). This simply means that small finance banks can now offer UPI-linked credit facilities to their customers. The move will provide credit facilities to those who bank with smaller institutions and bring more people, especially those in small towns and rural areas where SFBs operate, to access credit digitally and conveniently via UPI. This will boost financial inclusion. UPI allows accessing pre-approved credit for payments instead of using funds
