Reserve Bank Governor today made a big announcement regarding UPI, to increase the scope of Unified Payments Interface (UPI), Shaktikanta Das told that UPI can now be used in pre-approved credit lines of banks.
UPI to be linked to pre-approved credit lines
Shaktikanta Das said that now apart from deposit accounts, there is a proposal to increase the scope of UPI by enabling transfers through pre-approved credit lines in banks. Understand it in such a way that UPI will facilitate the payment of credit financed by network banks.
However, there is still no clarity about how it will work or how banks will implement it. The Reserve Bank Governor said that this step will encourage innovation. UPI has changed the face of retail payments in India, UPI has been used to develop new products and features from time to time.
How will it work and what is the benefit of it
Although the picture is not very clear about this, but payments through UPI in pre-approved credit lines will be beneficial in many ways. Understand it like this, suppose you have a credit card, which you use at the time of need, when the payment is due, you pay its bill. You can spend only as much as your credit card limit.
Now suppose you are a customer of XYZ Bank, you have a savings account with this bank. Now the bank can give you the facility of pre approved credit line instead of physical credit card. He will tell you that you have any amount, say a credit line of 1 lakh rupees, if you want, you can take it. If you accept this offer, then this 1 lakh credit line will be added to your bank’s mobile app, which will be separate from the savings account. That is, in the same app, you will see the amount of savings account and credit line.
When you have to make a payment somewhere, apart from saving, you can also pay through credit line through UPI. Suppose you have spent Rs 50,000, then the remaining Rs 50,000 is left. By repaying it, you can get back 1 lakh, and just like that you will always have a credit line.
The Reserve Bank Governor has already taken several steps to promote UPI, last month launched PayNow in association with Singapore, through which payments can be made in Singapore through UPI. Citizens coming from G20 countries also have the facility to pay through UPI in India, as they do not have any bank account in India.