New Delhi: The Reserve Bank of India on Friday said that Small Finance Banks will now be allowed to extend pre-sanctioned credit lines through the UPI.
“Credit line on UPI was launched in September 2023 and was made available through Scheduled Commercial Banks (SCBs). It has now been decided to permit Small Finance Banks also to extend pre-sanctioned credit lines through the UPI. This will further deepen financial inclusion and enhance formal credit, particularly for ‘new to credit’ customers,” RBI Governor Shaktikanta Das, announcing the outcome of the three-day Monetary Policy Committee (MPC) meeting said.
What Is Credit On UPI?
The Unified Payments Interface (UPI) System will now contain pre-approved credit lines that banks have provided for transactions.
The Reserve Bank of India kept the key interest rates unchanged for the 11th consecutive time on Friday. RBI Governor Shaktikanta Das, announcing the outcome of the three-day Monetary Policy Committee (MPC) meeting said that the repo rate has been kept unchanged at 6.5 percent.
RBI has also announced that collateral-free agriculture loans will be raised from Rs 1.6 lakh to Rs 2 lakh per borrower.
“The limit for collateral-free agriculture loans was last revised in 2019. Taking into account the rise in agricultural input costs and overall inflation, it has been decided to increase the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh per borrower,” Das added.
