Operation of Pre-sanctioned credit lines at Banks through UPI
Eliza Bahrainwala, Executive | eliza@vinodkothari.com
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Open in new tab UPIs become virtual credit cards: A game changer in credit delivery
– Vinod Kothari & Abhirup Ghosh | finserv@vinodkothari.com
The recent notification[1] by the RBI permitting banks to provide pre-sanctioned credit facilities to be used by Unified Payment Interface (UPI) is a game changer. The full dimensions of this new mode of extending credit will possibly take some time to develop or demonstrate, but clearly, as UPI itself changed the way the country handles payments, the linking of UPI with pre-sanctioned credit facilities is also a major change.
Currently, UPIs may pull money from the customer’s bank account (current or savings account), overdraft accounts, prepaid wallets or credit cards. Now, UPI may have a linked credit facility as well, and a customer may dip into that credit line while making any payment for which she currently uses UPI.
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