RBI expands UPI to include pre-sanctioned credit lines from banks and SFBs

The Reserve Bank of India (RBI) has expanded the scope of the Unified Payments Interface (UPI) to include transactions through pre-sanctioned credit lines from Scheduled Commercial Banks and Small Finance Banks (SFBs), as announced in the Statement on Developmental and Regulatory Policies dated December 6, 2024. This move is aimed at enhancing digital payment flexibility and accessibility for individual customers.

Until now, UPI facilitated payments linked to savings accounts, overdraft accounts, prepaid wallets, and credit cards. With this latest directive, individuals can now also utilise pre-approved credit lines issued by banks and SFBs for UPI transactions, subject to their prior consent.

Banks and SFBs can establish their own terms and conditions for these credit lines, in accordance with their Board-approved policies. These terms may cover aspects such as credit limits, tenure, interest rates, and other related conditions.

This directive has been issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), further reinforcing RBI’s commitment to broadening the digital payments ecosystem in India.