The Reserve Bank recommended on Friday to allow small financing institutions to provide pre-approved credit lines via the Unified Payments Interface (UPI).
UPI is a real-time payment system designed by NPCI for mobile transactions.
In September 2023, the scope of UPI was increased to allow commercial banks to link pre-sanctioned credit lines through UPI and utilize them as a funding account, with the exception of Payments Banks, Small Finance Banks (SFBs), and Regional Rural Banks.
RBI Governor Shaktikanta Das stated that a credit line on UPI has the potential to make low-ticket, short-term items available to “new-to-credit” clients.
SFBs use a high-tech, low-cost methodology to reach the last-mile client and can help extend credit availability on UPI, he added.
“It is, therefore, proposed to permit SFBs to extend pre-sanctioned credit lines through the UPI. Necessary guidelines will be issued shortly,” he said while unveiling the latest bi-monthly monetary policy.
The Governor also stated that the Reserve Bank has used both traditional and new-age communication techniques as part of its toolkit to ensure transparency and greater impact of its decisions, explain the rationale for its decisions, and disseminate various awareness messages to a larger audience.
Over the last few years, the Reserve Bank has expanded the scope of its public awareness operations, including those conducted through social media.
Mr Das stated that the Reserve Bank intends to develop podcasts to further disseminate information of interest to the general population.
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Source: NDTV
