“Necessary guidelines will be issued shortly,” RBI Governor Shaktikanta Das said. (Representative)

Mumbai:

The Reserve Bank on Friday proposed allowing small finance banks to extend pre-sanctioned credit lines through the Unified Payments Interface (UPI).

UPI is a real-time instant payment system developed by NPCI for transactions via mobile phones.

In September 2023, the scope of UPI was expanded by allowing pre-sanctioned credit lines to be linked through UPI and used as a funding account by commercial banks excluding payment banks, small finance banks (SFBs) and regional rural banks.

The credit line on UPI has the potential to make low-cost, low-duration products available to ‘newbie to credit’ customers, RBI Governor Shaktikanta Das said.

SFBs leverage a high-tech, low-cost model to reach the last-mile customer and can play a facilitative role in expanding the reach of credit on UPI, he said.

“It is therefore proposed to allow SFBs to extend pre-sanctioned credit lines through UPI. Necessary guidelines will be issued soon,” he said while unveiling the latest fortnightly monetary policy.

The Governor also said that the Reserve Bank has deployed traditional and new communication techniques as a key part of its toolkit to ensure transparency and greater impact of its decisions, explain the rationale for its decisions and disseminate various messages of awareness to a wider audience.

In recent years, the Reserve Bank has expanded the scope of its public outreach activities, particularly through social media.

As a continuation of this effort, the Reserve Bank proposes to launch podcasts for wider dissemination of information of interest to the general public, Das said.

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