The RBI has set some conditions for this new facility. First, the credit line must be offered by a scheduled commercial bank. Second, the customer must have given their consent to the bank for the credit line to be used for UPI payments,
Is RBI allow banks to offer pre-approved credit on UPIThe Reserve Bank of India
The Reserve Bank of India
The Reserve Bank of India (RBI) announced on April 6, 2023, that it would allow banks to offer pre-approved credit lines through the Unified Payments Interface (UPI). This means that customers who have been pre-approved for a credit line by their bank will be able to use that credit line to make UPI payments.
Third, the bank must have a board-approved policy for the use of pre-approved credit lines for UPI payments.
The RBI says that this new facility will make it easier for customers to access credit and make payments. It will also help to reduce the cost of credit for customers.
some of the benefits of using pre-approved loan facilities for UPI payments:
Convenience, You can make payments without having to wait for a credit card or debit card transaction to clear.
Speed, UPI payments are processed instantly, so you can get the goods or services you need right away.
Flexibility: You can use the pre-approved loan for any purpose, not just for UPI payments.
Low interest rates: Banks may offer lower interest rates on pre-approved loans than on other types of loans.
However, there are also some risks associated with using pre-approved loan facilities for UPI payments:
Overspending: If you are not careful, you could end up overspending and racking up debt.
Under this facility, payments can be made through a pre-approved credit facility offered to individuals by a scheduled commercial bank with the prior approval of the individual customer, RBI said.
New rules have been issued for reset.
The central bank said this would reduce costs and help create unique products for the Indian market. Transactions through UPI, which is used for 24-hour instant money transfer through mobile devices, crossed 10 billion in August. The number of UPI transactions in July was 9.96 billion.
The Reserve Bank of India (RBI) has recently issued new rules to restore floating interest rates for EMI-based personal loans. The central bank said that while sanctioning loans, all regulated entities (REs), including banks and NBFCs, should clearly inform them that any change in the benchmark interest rate may affect borrowers’ EMI, loan tenure or both. If there is any change in EMI, loan tenure or both due to interest rates, the borrowers will be informed immediately through proper channels, RBI said.
Late payment fees: If you do not repay the loan on time, you may be charged late payment fees.
High-interest rates, The interest rates on pre-approved loans can be high, so you should make sure you understand the terms of the loan before you sign up.
Overall, the RBI’s decision to allow banks to offer pre-approved credit lines through UPI is a positive development. It will make it easier for customers to access credit and make payments, and it could help to reduce the cost of credit for customers. However, it is important to use this facility responsibly and to be aware of the risks involved.
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