Delhi, December 6, 2024 (Punjab Khabarnama Bureau)- In an important move, the Reserve Bank of India has allowed Small Finance Banks (SFBs) to provide credit lines to their customers. This decision will help small businesses, micro-entrepreneurs, and marginalized communities in rural and semi-urban areas access easy and affordable loans. The UPI-based pre-approved credit line is a financial product designed to increase access to loans for the general public. This product allows individuals and small businesses to receive pre-approved credit lines from banks, which can be used for transactions via the Unified Payments Interface (UPI).
The UPI credit line is a pre-approved credit limit linked to the user’s UPI account. This facility allows users to borrow money from their bank account and repay it in installments or at the end of a billing cycle.
How to Use UPI Credit Line:
- Through the UPI credit line, users can obtain loans based on their transaction history and credit score.
- Before using this feature, users can authenticate transactions with their UPI PIN. Afterward, payments can be made anywhere using a QR code.
- The UPI credit line works similarly to a digital credit card. Like a credit card, a customer is given a spending limit to use.
- To avail of this facility, users must first apply at the bank.
- Once approved by the bank, users can make payments via UPI, whether or not they have funds in their account.
Summary: RBI has allowed Small Finance Banks to offer UPI-based pre-approved credit lines, enabling easy and affordable loans for small businesses and marginalized communities in rural and semi-urban areas.