RBI allows Pre-Sanctioned Credit Lines through Unified Payments Interface (UPI)

Margesh Rai

30 Mar, 2024

RBI has issued a notification dated 04.09.2023 allowing the pre-sanctioned credit lines at Banks through the Unified Payments Interface (UPI). The RBI ha been conferred power under Section 10 (2) r/w Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007) to issue such directive.

The Statement issued on Developmental and Regulatory Policies on 06.04.2023 expanded the scope of UPI by enabling transfer to/from pre-sanctioned credit lines at banks. Until now, only savings accounts, overdraft accounts, prepaid wallets and credit cards can be linked to UPI, but now the scope of UPI has been expanded by including credit lines as funding accounts. 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. As per the approved Board policy, Banks may stipulate terms and conditions of use of such credit lines. The terms may include the credit limit, period of credit, rate of interest, etc.