“At present, UPI transactions are enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments including wallets. It is now proposed to expand the scope of UPI by enabling transfer to/from pre-sanctioned credit lines at banks, in addition to deposit accounts. In other words, UPI network will facilitate payments financed by credit from banks,” RBI said.
This can reduce the cost of such offerings and help in development of unique products for Indian markets. Detailed instructions in this regard will be issued separately, the regulator said.
“The RBI’s forward-thinking decision to allow pre-sanctioned credit lines at banks to be accessible through UPI will drive innovation and revolutionise the way customers access credit. We believe this is a significant step towards a more efficient and digital banking ecosystem and will undoubtedly provide a much-needed boost to the industry. The ability to access pre-sanctioned credit lines through UPI will prominently help in reduction of the time and effort required for customers to secure loans, ultimately driving economic growth and development,” Rajsri Rengan, India Head of Development, Banking and Payments, at FIS.
“The RBI announcement to allow access to pre-sanctioned credit lines via UPI is a milestone decision which could re-ignite the digital lending and BNPL space. With the restrictions which were earlier imposed on disbursements into prepaid wallets and cards from credit lines and loans, many BNPL players had to resort to tenuous work-arounds to continue to deliver a seamless purchase experience. With the UPI channel opened up for access to credit lines, the point-of-purchase credit experience becomes seamless and opens up avenues to use credit across a much larger merchant base. This has the potential to drive transformational growth for the BNPL lending sector,” said Harish Prasad, Head of Banking, India, FIS.
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