UPI now handles 75% of India’s retail digital payment volume. In March alone, there were 8.7 billion transactions worth a combined 14.1 trillion yen, according to NPCI statistics.


The Reserve Bank of India (RBI) said on Thursday that those who have pre-approved credit lines from banks would soon be able to utilise them to make payments via the Unified Payments Interface (UPI), paving the way for new credit products on the domestic payments platform.

Presently, UPI payments may be made between bank accounts, occasionally through the use of prepaid devices like wallets.

The RBI permitted the usage of Rupay credit cards on UPI in June of last year, which raised expectations that it would ultimately permit the distribution of credit items over the payment system.

The RBI approved the movement of money to and from pre-approved credit lines on Thursday. In other terms, the UPI network will enable bank credit-financed payments. This can lower the price of such goods and aid in the creation of distinctive items for Indian consumers, according to a statement from RBI. Pre-approved credit, also known as pre-sanctioned credit lines, is credit that banks sanction for their clients after examining internal data.

75% of India’s retail digital payment volume is presently made through UPI.
According to figures from the National Payments Corp. of India, it logged 8.7 billion transactions valued 14.1 trillion in only March (NPCI).

Bankers and business experts applauded the decision, saying it will force lenders to develop fresher solutions to address issue. According to Zarin Daruwala, cluster CEO for Standard Chartered Bank’s India and South Asia markets (Bangladesh, Nepal, and Sri Lanka), allowing the operation of pre-sanctioned credit lines through UPI could aid in broadening the delivery of credit as well as encourage the creation of new UPI-based revolving credit products.

According to Yes Securities’ head of research and lead analyst Shivaji Thapliyal, allowing pre-approved credit lines from banks creates a new revenue stream for the UPI network.

Thapliyal claimed that banks would soon be able to provide credit products and, in essence, replicate credit card offers without actually issuing real credit cards or needing bulky, expensive physical acceptance infrastructure.

“But this may also include non-customers,” he added, “whose credit bureau and other information may have been examined by the banks.”

Others claimed that if this is put into practise, the price of extending loans would go down.

According to existing UPI limitations, this will allow UPI to be linked to credit lines that have been approved by banks for use in payment transactions for secured and unsecured lending products including personal loans and working capital loans. For the bank and the consumer, the cost of using the credit product may be decreased, according to Mihir Gandhi, partner, payments transformation, PwC India.

According to him, there is also a chance for other card networks to collaborate with banks to create credit products and provide credit lines that can be connected to UPI for client use.

The move, according to Pranay Jhaveri, managing director for India and South Asia at Euronet, would not only improve the simplicity and adaptability of financial transactions but also open the door for UPI to expand further.

Pre-approved credit lines are an additional feature that will likely result in a spike in transaction volumes and a smoother user experience, which will increase the acceptance of digital payments throughout the nation, according to Jhaveri.

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