RBI To Allow Small Finance Banks To Extend Credit Lines Through UPI

Mumbai:

The Reserve Financial institution on Friday proposed to permit small finance banks to increase pre-sanctioned credit score traces by means of Unified Funds Interface (UPI).

UPI is an prompt real-time fee system developed by NPCI for transactions by means of cellphones.

In September 2023, the scope of UPI was expanded by enabling pre-sanctioned credit score traces to be linked by means of UPI and used as a funding account by business banks excluding Funds Banks, Small Finance Banks (SFBs) and Regional Rural Banks.

Credit score line on UPI has the potential to make obtainable low-ticket, low-tenor merchandise to “new-to-credit” clients, RBI Governor Shaktikanta Das stated.

SFBs leverage a high-tech, low-cost mannequin to succeed in the last-mile buyer and might play an enabling position in increasing the attain of credit score on UPI, he stated.

“It’s, subsequently, proposed to allow SFBs to increase pre-sanctioned credit score traces by means of the UPI. Needed pointers will likely be issued shortly,” he stated whereas unveiling the newest bi-monthly financial coverage.

The Governor additionally stated that the Reserve Financial institution has been deploying conventional in addition to new-age communication methods as a key a part of its toolkit to make sure transparency and larger affect of its selections, clarify the rationale behind its selections, and disseminate numerous consciousness messages to a wider viewers.

The Reserve Financial institution has been increasing the scope of its public consciousness actions together with by means of social media over the previous few years.

In continuation of this endeavour, the Reserve Financial institution proposes to launch podcasts for wider dissemination of knowledge that’s of curiosity to most of the people, Mr Das stated.

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