The Reserve Bank of India (RBI) on Thursday proposed to expand the scope of the Unified Payments Interface (UPI) by including pre-sanctioned credit lines at banks within the ambit of the popular payment platform. The RBI recently permitted RuPay credit cards to be linked to the UPI.
Essentially, consumers will be allowed to make UPI transactions through a pre-approved credit line, which their bank may choose to make available to them. Currently, UPI transactions are enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments, including wallets.
“For transactors at points of sale, this offers the convenience of a credit card to users – a majority of whom do not have a credit card. For peer-to-peer transfers, this allows users to draw down credit on the basis of utilisation – only paying for what they use,” Aditya Kumar, co founder and chief executive officer, NIRO, said.
“Small credit lines could be a significant step towards making microcredit available seamlessly to a large number of borrowers who could enter the formal credit system using credit on UPI as a point of entry. This will undoubtedly drive financial inclusion at scale,” he added.
The RBI also announced that it will develop a web portal to enable search across multiple banks for unclaimed deposits based on user inputs. The search results will be enhanced by use of certain artificial intelligence tools.
The central bank will also put a comprehensive framework in place for strengthening and improving the efficacy of the grievance redressal mechanisms and customer service provided by credit institutions and credit information companies. In furtherance of this, the central bank has brought credit information bureaus under the ambit of the Reserve Bank Integrated Ombudsman Scheme.
“It is also proposed to put in place a compensation mechanism for delayed updation/rectification of credit information; a provision for SMS/email alerts to customers when their credit information are accessed from credit information companies, a timeframe for ingestion of data received by these companies from credit institutions; and disclosures relating to number and nature of customer complaints received on the website of credit information companies. Detailed guidelines in this regard will be issued shortly.” the RBI said in its statement on developmental and regulatory policies.