UPI - Capability enhanced ( a new Financial product)

This RBI recently issued a directive under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). Under this direction, RBI has expanded the scope of UPI 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. The proposed changes ensure that the directive is enforceable and also subject it to the regulatory supervision of the RBI.

As a part of an ongoing effort of RBI to enhance the capabilities of the UPI system, promote the development of unique financial products in the Indian market, and accept the capabilities of UPI to provide a rich and reliable data trail of transactions, allowing lenders to assess the creditworthiness of potential borrowers based on their income, spending patterns, and repayment behavior, such measure will enhance the financial inclusion to the small business entrepreneurs and remote consumers. ?Further, this data can help streamline the credit assessment process and eliminate the need for lengthy application procedures. Consumers and SME entrepreneurs can leverage their pre-sanctioned credit lines on UPI for a hassle-free payment experience.