Mumbai: RBI governor Shaktikanta Das said credit on UPI will receive another boost from a wider remit which allows small finance banks to offer loans on the UPI platform. UPI loans are small-ticket credit lines that are extended by lenders for the immediate needs of the customer. Credit on UPI was first announced by the RBI last year, in which it shared that lenders will be able to extend pre-approved credit lines to existing customers. The loans on credit offerings is expected to benefit small retail and business borrowers
Credit on UPI is a previously agreed set amount that is accessible on tap to customers. The credit line can be set up in the form of payments in the choice of UPI app. This can then be used to pay for specific merchant transactions.
How credit on UPI works
Individuals can also access credit on UPI using RuPay cards issued by their respective bank or credit card issuer. According to NPCi, the UPI credit limit is pegged at Rs 1 lakh per day. It is capped at Rs 2 lakh per day on specific merchant category codes. The UPI user can tap the pre-approved credit line on YPI and pay select merchants by scanning their QR code.
RuPay on UPI transactions rise
RuPay on credit card transactions jumped to Rs 63800 crore in April-October 2024. This marked a 91 per cent rise from Rs 33400 crore in FY24. RuPay on UPI functionality was announced in 2022 by RBI governor Das. The credit on UPI functionality is aimed at tapping new to credit customers through ease of loan access.
The Reserve Bank of India in its additional announcements stated that small finance banks will now be able to offer loans on UPI. This was earlier limited to large commercial banks. Here’s why this is a big step for democratising credit. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
