India’s central bank, the Reserve Bank of India (RBI), is considering expanding the reach of its popular Unified Payments Interface (UPI) digital payments system by allowing pre-approved credit lines to be offered through the platform.
RBI Governor Shaktikanta Das announced this initiative as part of the central bank’s recent monetary policy decision, stating that it would encourage further innovation in digital payments.
The UPI system is an instant, real-time payment platform that enables users to transfer money across multiple banks without disclosing their account details, thereby reducing the usage of cash and debit cards for daily transactions.
The UPI system has experienced record usage in recent months, with 8.65 billion transactions worth 14.05 trillion rupees in March 2023. The RBI’s move to allow RuPay credit cards to be linked to UPI has further boosted digital payments in the country.
By enabling banks to offer customers pre-approved credit lines via UPI, the platform could emerge as a viable alternative to credit cards. This development could have a significant impact on how banks view credit cards, according to independent policy researcher Srinath Sridharan.