RBI approves Operation of Pre-Sanctioned Credit Lines at Banks through UPI

The Reserve Bank of India (RBI) said that the UPI System will also contain pre-approved credit limits given by banks for transactions, on Monday.

Previously, only the deposited amount could be exchanged over the UPI System.

In April this year, RBI recommends to expand the scope of UPI by enabling transfer to / from pre-sanctioned credit lines at banks. Currently, savings account, overdraft account, prepaid wallets and credit cards can be linked to UPI. As announced, the scope of UPI is now being expanded by inclusion of credit lines as a funding account.

UPI may currently be linked to savings accounts, overdraft accounts, prepaid wallets, and credit cards.

According to a circular on ‘Operation of Pre-Sanctioned Credit Lines at Banks through UPI,’ the scope of UPI is currently being enlarged by the addition of credit lines as a funding account.

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

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.

This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).