RBI allows small finance banks to offer credit line on UPI
07 Dec 2024, 02:36 AMRBI Governor Shaktikanta Das announced that small finance banks will now be permitted to provide pre-sanctioned credit lines through UPI.
Team Head&Tale
Share the story on
The Reserve bank of India (RBI) has allowed small finance banks to offer the credit line on Unified Payment Interface (UPI).
RBI Governor Shaktikanta Das, in its Monetary Policy Committee (MPC) meeting on December 6, announced that small finance banks (SFBs) will now be permitted to provide pre-sanctioned credit lines through UPI.
This move aims to support underserved groups, including small businesses, micro-entrepreneurs, and individuals in rural and semi-urban regions.
According to the RBI, “Credit line on UPI has the potential to make available low-ticket, low-tenor products to ‘new-to-credit’ customers. SFBs leverage a high-tech, low-cost model to reach the last mile customer and can play an enabling role in expanding the reach of credit on UPI. It is, therefore, proposed to permit SFBs to extend pre-sanctioned credit lines through the UPI. Necessary guidelines will be issued shortly.”
Credit line on UPI was launched in September 2023 and was made available to scheduled commercial banks, it has now been decided to permit small finance banks to sanction credit line on UPI, the RBI stated. According to NPCI, 'Pre-sanctioned Credit Lines on UPI' is an innovative financial offering developed in alignment with the Reserve Bank of India's vision to transform customer’s access to credit. This product empowers individuals and small businesses to obtain pre-sanctioned credit lines from banks, which can be utilized immediately for transactions through UPI. It facilitates availability and frictionless usage of credit lines, overdrafts and retail loans, fostering economic growth and enhancing financial inclusion.
Mohit Bedi, co-founder, Kiwi, said, "This is great news for SFBs. Credit on UPI opens up a new business avenue for SFBs, which didn’t previously exist. Many SFBs, like AU Bank, have already found success entering the credit space through credit cards. With credit lines on UPI, SFBs can now offer low-cost credit solutions, both in terms of operations and customer acquisition, leveraging their extensive merchant networks in focused locations. This also provides an excellent opportunity to onboard new-to-bank (NTB) customers. It's a match made in heaven."
"The central bank has extended the credit line to small finance banks (SFBs). This simply means that small finance banks can now offer UPI-linked credit facilities to their customers. The move will provide credit facilities to those who bank with smaller institutions and bring more people, especially those in small towns and rural areas where SFBs operate, to access credit digitally and conveniently via UPI. This will boost financial inclusion. UPI allows accessing pre-approved credit for payments instead of using funds from your accounts," Adhil Shetty, CEO of Bankbazaar.com said.
Who Reads Us
“I enjoy reading The Head and Tale for their coverage on the Fintech landscape. The reporting is incisive and honest, and it demonstrates a sharp understanding of the industry and the issues that concern it. I'd like to extend my best wishes to Arti for her continued success.”
“Well-researched, informative and analysis based reporting makes an interesting read. 'The Head and Tale' news portal has been demonstrating this quite well covering fintech and emerging tech sectors. Their timely updates, exclusive stories and different perspectives on these sectors help me stay informed. Kudos to Arti Singh for pursuing her passion and best wishes to the team.”
“The Head and Tale stands out for its deep industry knowledge and impressive network of sources. I especially appreciate that the reporting remains independent, rarely resorting to paid puff pieces, making it a publication I can genuinely trust. Having followed Arti’s work for years, I’ve come to rely on The Head and Tale for its unparalleled insight and truly independent coverage. Arti’s long-standing presence in the sector means her reporting is always informed, with access few can match.”
“What I really appreciate about The Head and Tale is that it doesn’t just report the news, it interprets it. The stories are well-researched, comprehensive, and bold. Arti brings a fearless lens to reporting, often asking the uncomfortable but necessary questions. She makes you pause, reflect, and rethink what it all means for the payments and fintech ecosystem. It’s rare to find journalism that’s this sharp, timely, and relevant to the work we do every day.”
“I’ve always valued journalism that goes beyond surface-level headlines. The Head and Tale does exactly that - it connects the dots, asks the tough questions, and brings clarity to the shifts shaping our evolving industry. I’ve even encouraged my team members to subscribe, because staying informed through credible, deeply reported stories is as important as building products. For me, The Head and Tale has become part of essential reading.”
Related News
