RBI Monetary Policy: UPI To Allow Pre-Sanctioned Credit Lines At Banks, Says Shaktikanta Das

Highlighting that RuPay credit cards were permitted to be linked to UPI, Das said the new proposal to permitting operation of pre-sanctioned credit lines at banks via UPI will encourage innovation

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday announced the operation of pre-sanctioned credit lines at banks through unified payments interface (UPI). The governor during his speech, said this initiative will encourage innovation.

"UPI has transformed retail payments in India. UPI’s robustness has been leveraged to develop new products and features from time to time," Das said. Highlighting that RuPay credit cards were permitted to be linked to UPI, he said that the new proposal to permitting operation of pre-sanctioned credit lines at banks via UPI will encourage innovation.

In March 2023, according to National Payments Corporation of India’s (NPCI) data, UPI recorded its highest ever number of transactions at 8.7 billion. On a year-on-year (YoY) basis, the real-time payments jumped 60 per cent.

Earlier the governor said that payments through UPI have grown exponentially in the past 12 months with daily transactions crossing 36 crore, which is up 50 per cent from 24 crore in February 2022.

"A recent pan-Indian digital payments survey (covering 90,000 respondents) revealed that 42 per cent of respondents have used digital payments," Das said in March.

On the growth front, the RBI marginally revised upwards the economic growth projection for the current fiscal to 6.5 per cent, from its earlier estimate of 6.4 per cent. During the announcement of the first bi-monthly monetary policy (MPC) of FY24, Das said the GDP growth in the first quarter of 2023-24 is expected at 7.8 per cent.

The growth for second, third and fourth quarter of the current fiscal year has been projected at 6.2 per cent, 6.1 per cent, and 5.9 per cent, respectively.

Meanwhile, the bank has projected marginal easing in retail inflation to 5.2 per cent in the current fiscal, but cautioned that the fight against inflation is far from over.

Although the RBI cut its inflation estimate from its February projection of 5.3 per cent, RBI Governor Shaktikanta Das said the inflation outlook remains dynamic amid the recent jump in crude oil prices on account of OPEC decision to cut output.

Taking into account a crude oil price of $85 per barrel and a normal monsoon, the retail inflation in the current fiscal is projected to be 5.2 per cent with risks evenly balanced, Das said.