Mumbai, Sept 5 (KNN) The Reserve Bank of India (RBI) on Monday said pre-sanctioned credit lines issued by banks for transactions will be allowed through the Unified Payments Interface (UPI) System.

Earlier, only the deposited amount could be transacted through the UPI System.

On April 6, 2023, the Central Bank proposed to expand the scope of the Unified Payments Interface by enabling transfer to/from pre-sanctioned credit lines at banks.

Currently, savings accounts, overdraft accounts, prepaid wallets and credit cards can be linked to UPI.

The scope of UPI is now being expanded by the inclusion of credit lines as a funding account, Reserve Bank said in a circular on 'Operation of Pre-Sanctioned Credit Lines at Banks through UPI'

“Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with the prior consent of the individual customer, are enabled for transactions using the UPI System,” the RBI said.

“Banks may, as per their board approved policy, stipulate terms and conditions of use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc,” the release added.

This can reduce the cost of such offerings and help in development of unique products for Indian markets.  (KNN Bureau)