Credit Lines on UPI: RBI Governor Shaktikanta Das says small finance banks to now offer facility

Reserve Bank of India (RBI) Governor Shaktikanta Das, during the Monetary Policy Committee (MPC) meeting announcement on December 6, said the bank's facility of providing credit lines through Unified Payments Interface (UPI) will now be expanded.

Das said that while the facility started with commercial banks, it will now be expanded to include other banking institutions. “In 2023, the option to avail a credit line through UPI (Unified Payments Interface) became more widely accessible; till now, only commercialised banks had this feature, and now small finance banks are also able to sanction this,” he said.

On Inoperative Bank Accounts

Further, regarding financial institutions, Das said banks have been asked to reduce the number of inoperative accounts and unclaimed deposits, among other advice.

"Banks to reduce the number of inoperative accounts and unclaimed deposits. On the latter, banks have been advised for direct benefit transfer (DBT) beneficiaries.

“Banks to reduce the number of inoperative accounts and unclaimed deposits. On unclaimed deposits, KYC hassle-free: What banks have been advised for DBT beneficiaries. Segregate the amounts of beneficiaries of state and central banks,” he said.

RBI MPC keeps policy rate unchanged — Details

The RBI MPC today decided to keep the policy rate unchanged for the 11th consecutive time, but sharply lowered the GDP growth forecast to 6.6 per cent for the current fiscal year, as against earlier projection of 7.2 per cent.

Announcing the fifth bi-monthly monetary policy for the current financial year, Das said the MPC has decided to keep the repo rate unchanged at 6.5 per cent while keeping the policy stance unchanged at neutral. He added that the MPC will remain watchful of incoming macroeconomic data for future action.

However, the RBI sharply cut the GDP growth projection to 6.6 per cent from the earlier level of 7.2 per cent while raising the inflation target to 4.8 per cent from the previous projection of 4.5 per cent for the current fiscal year.

The central banks also maintained the status quo on interest rates despite July-September quarter GDP growth falling to a seven-quarter low of 5.4 per cent, as against their own projection of 7 per cent.

In a bid to make more money available to banks for lending and boost economic activity, the RBI slashed the Cash Reserve Ratio (CRR) to 4 per cent from the existing 4.5 per cent. This would release ₹1.16 lakh crore to banks and improve their lending capacity.

The CRR is the percentage of a bank’s total deposits that it is required to maintain in liquid cash with the RBI. The RBI determines the CRR percentage from time to time. Banks do not earn interest on this amount.

The government reconstituted the Reserve Bank's rate-setting panel in October. This was the second MPC meeting of the reconstituted panel, which had three newly appointed external members: Ram Singh, Saugata Bhattacharya, and Nagesh Kumar.

(With inputs from PTI)