Banks will now be allowed to offer their customers lending facilities on UPI accounts as well. The RBI has granted its blessing. Only bank account deposits are currently accepted for UPI transactions. The Central Bank has suggested beginning this service in April of this year. Currently, UPI may be linked to savings accounts, overdraft accounts, prepaid wallets, and credit cards.

All banks would be permitted to provide consumers with pre-determined loan limits, per the notification the RBI released. However, banks will need consumers’ prior consent for this. In this regard, banks must have their board establish a policy outlining all the terms and circumstances associated with the loan offer. The maximum loan amount, the loan term, and the interest rate must be mentioned. Through UPI, more than 10 billion transactions were made in August.

According to RBI Governor Shaktikanta Das, using local currencies in cross-border transactions will protect poor and emerging economies from global shocks. Additionally, it will make dealing with currency changes in relation to the dollar easier. He said that the action may also promote the growth of local capital and foreign exchange markets. Das stated that multi-currency payment platforms might potentially offer a mechanism to promote the local currency while speaking at the G20 TechSprint Finale 2023 in Mumbai.

The central banks of several nations are considering launching their own digital currencies, or CBDC, according to Das, who stated that these efforts are already underway. One of the nations to start CBDC pilot programs in the wholesale and retail sectors is India. We are gradually growing it. By supporting rapid settlement, I think the DAS CBDC may significantly contribute to making cross-border payments more affordable, quick, and secure. According to him, UPI has transformed India’s digital payment ecosystem and advanced financial inclusion by bringing millions of unbanked people into the country’s established financial system. A prime illustration of our dedication to innovation is UPI.