Small Finance Banks can now offer Credit Line on UPI

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Small Finance Banks can now offer Credit Line on UPI

RBI expands credit line on UPI to small finance banks. This is meant to enhance financial inclusion and access to formal credit for new users.

In a move to deepen financial inclusion, the Reserve Bank of India (RBI) has allowed small finance banks (SFBs) to offer credit lines on Unified Payments Interface (UPI). The announcement was made during the Monetary Policy Committee (MPC).

The credit line on UPI, first introduced in September 2023 for scheduled commercial banks will now be extended to SFBs, enabling them to provide pre-sanctioned credit lines through UPI. This development is expected to facilitate low-ticket, short-tenor credit access for ‘new-to-credit’ customers, utilising the SFB’s cost-efficient and technology-driven outreach to underserved segments.

RBI’s official statement highlights the potential of this initiative to significantly expand credit access in India, especially for customers in remote areas. Guidelines for implementation will be issued soon.

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