Image Source : PTI Reserve Bank of India
In a latest development, the Reserve Bank of India on Friday proposed to allow small finance banks to extend pre-sanctioned credit lines through Unified Payments Interface (UPI). It should be noted that the UPI is an instant real-time payment system developed by NPCI for transactions through mobile phones.
Credit line on UPI has the potential to make available low-ticket, low-tenor products to “new-to-credit” customers, RBI Governor Shaktikanta Das said.
The scope of UPI was in September 2023 expanded by enabling pre-sanctioned credit lines to be linked through UPI and used as a funding account by commercial banks excluding Payments Banks, Small Finance Banks (SFBs) and Regional Rural Banks.
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, he said.
“It is, therefore, proposed to permit SFBs to extend pre-sanctioned credit lines through the UPI.
Necessary guidelines will be issued shortly,” he said while unveiling the latest bi-monthly monetary policy.
The Governor also said that the Reserve Bank has been deploying traditional as well as new-age communication techniques as a key part of its toolkit to ensure transparency and greater impact of its decisions, explain the rationale behind its decisions, and disseminate various awareness messages to a wider audience.
The Reserve Bank has been expanding the scope of its public awareness activities including through social media over the last few years.
In continuation of this endeavour, the Reserve Bank proposes to launch podcasts for wider dissemination of information that is of interest to the general public, Das said.
(With Inputs From PTI)
