Have you ever faced the predicament where funds in your savings account run dry by month-end, leaving you grappling with payments? Fret not, relief is on the horizon. A novel feature is soon going to be introduced to the Unified Payment Interface (UPI) – the credit line.
This pre-approved limit will be a lifesaver during those shopping sprees or emergencies when you’re running short on funds in your account. This innovative move was unveiled by the National Payments Corporation of India (NPCI) during the Global Fintech Festival (GFF) held in September. Leading banks in India like Axis Bank, HDFC, ICICI, Kotak Mahindra, Punjab National Bank, and State Bank of India are already testing this service on platforms such as BHIM, PayZapp, Paytm, and GPay with a select group of users. Insider sources from banks have hinted that this service will soon be rolled out to a larger audience in the coming months.
Mandar Agashe, the founder and MD of fintech firm Sarvatra Technologies, opines that introducing credit lines in UPI payments is essentially an expansion of the UPI horizon. Such a feature might prove to be a game-changer, aligning the functions of UPI with credit cards, creating a unified platform for credit lines. Up till now, UPI was connected with savings accounts, overdraft accounts, prepaid wallets, and credit cards.
In April, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, announced the initiation of collateral-free, pre-approved credit lines and borrowing limits that can be accessed via the UPI platform by the user.
Most UPI accounts are tied to a bank’s saving accounts. To leverage the credit line service on UPI, users will need to formally apply with their respective banks. The banks will then assess the financial standing of the borrower. Eligibility will be determined based on income, credit score, and past payment patterns. Banks may require documentation such as income statements, ID proofs, and address verification. The documentation process might vary from one bank to another. Once your request is approved, the bank will inform you about your credit limit.
In essence, this new feature is poised to revolutionize the way people perceive and use UPI, making transactions even more seamless and convenient.
