Pre-sanctioned credit lines on UPI will aid in accelerating transactions,says UCO Bank's Ashwani Kumar

Pre-sanctioned credit lines on UPI will aid in accelerating transactions,says UCO Bank's Ashwani Kumar

The Reserve Bank's announcement to allow banks to issue pre-sanctioned credit lines on the Unified Payments Interface (UPI) system will aid in accelerating the growth in transactions, UCO Bank MD and CEO Ashwani Kumar said on September 5. "According to the recent National Payments Corporation of India (NPCI) data, UPI transactions have touched 10 billion in a month, and in 18-24 months, it is expected to touch 20 billion.

"But with the RBI's announcement of a credit line available to UPI, I think days are not far that…transactions will accelerate further," Kumar said while speaking in a panel discussion 'Leveraging Digital Infrastructure for transformation in lending & payments' at the three-day 'Global Fintech Fest 2023'. Because this has been a demand from customers for a long time and once this is made available, the adoption of UPI will be huge, he said, adding that the banks then have to bring in technology to make it available to their customers.

The apex bank on Monday said the UPI System will also include pre-sanctioned credit lines issued by banks for transactions. Earlier, only the deposited amount could be transacted through the UPI System.

In a circular, RBI said, "Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with the prior consent of the individual customer, are enabled for transactions using the UPI System". Kumar further said India is talking about cross-border transactions and the internationalisation of the rupee, and here, the payments bank will have a significant role to play.

RBI Governor Shaktikanta Das on Monday said that the adoption of Central Bank Digital Currency (CBDC) or digital currency can help in making cross-border payments more efficient. "As we move ahead and the way the country is partnering with other nations, UPI will require a huge amount of payment mechanisms apart from other available solutions. Banks are currently providing, and going forward, we will continue to provide all those services.

"But, banks have to probably advance their technology to bring in the capabilities to make sure that the customer-centric services, which are featured basically for ease from the angle of the customer, the lender and the vendor. This will make banks continue to innovate," he added.