{"id":145995,"date":"2024-12-07T19:07:57","date_gmt":"2024-12-07T13:37:57","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=current-affairs&#038;p=145995"},"modified":"2024-12-07T19:07:57","modified_gmt":"2024-12-07T13:37:57","slug":"sfbs-to-extend-upi-credit-line","status":"publish","type":"current-affairs","link":"https:\/\/pwonlyias.com\/stage\/current-affairs\/sfbs-to-extend-upi-credit-line","title":{"rendered":"RBI allows SFBs to Extend Credit Line through UPI"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The <\/span><b>Reserve Bank of India (RBI)<\/b><span style=\"font-weight: 400;\"> has allowed <\/span><b>small finance banks (SFBs)<\/b><span style=\"font-weight: 400;\"> to provide <\/span><b>pre-sanctioned credit line<\/b><span style=\"font-weight: 400;\">s through the <\/span><b>Unified Payments Interface (UPI)<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This step is expected to enhance financial inclusion and expand access to formal credit.<\/span><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>Previous Restrictions on UPI Credit Lines<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Earlier, only <\/span><b>scheduled commercial banks<\/b><span style=\"font-weight: 400;\"> were allowed, and other banks such as Small finance banks (SFBs), payments banks, and regional rural banks(RRBs) were excluded from this facility.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/www.pw.live\/batches\/upsc?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"noopener\">Enroll now for UPSC Online Course<\/a><\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-145974 alignright\" src=\"https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2024\/12\/710-67543f9cceaf6.webp\" alt=\"UPI\" width=\"450\" height=\"338\" srcset=\"https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2024\/12\/710-67543f9cceaf6.webp 705w, https:\/\/pwonlyias.com\/stage\/wp-content\/uploads\/2024\/12\/710-67543f9cceaf6-300x226.webp 300w\" sizes=\"(max-width: 450px) 100vw, 450px\" \/><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>About UPI Credit Line<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>UPI Credit Line<\/b><span style=\"font-weight: 400;\"> is a financial product aimed at making access to credit easier.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Developed by <\/span><b>: the National Payments Corporation of India (NPCI),\u00a0<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It aligns with the <\/span><b>Reserve Bank of India&#8217;s vision<\/b><span style=\"font-weight: 400;\"> to enhance credit accessibility.<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-size: 16pt;\"><b>Key Features of UPI Credit Line<\/b><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Pre-Sanctioned Credit<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Banks provide <\/span><b>pre-approved credit lines<\/b><span style=\"font-weight: 400;\"> to individuals and small businesses.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">This credit can be used immediately for payments via UPI.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Easy Linking<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Users can <\/span><b>link their credit lines<\/b><span style=\"font-weight: 400;\"> to<\/span><b> their UPI ID<\/b><span style=\"font-weight: 400;\"> using their registered mobile number.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Secure Transactions<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Every transaction is protected with a <\/span><b>dedicated UPI PIN<\/b><span style=\"font-weight: 400;\"> for the credit line.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Multiple Payment Options<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Credit lines can be used to make payments to merchants via QR codes or for <\/span><b>online shopping<\/b><span style=\"font-weight: 400;\"> on e-commerce platforms.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Credit Insights<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Users can check their:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Credit line status<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Utilized credit amount<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">EMI details directly in the UPI app.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Dispute Resolution<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Any issues can be resolved easily through the <\/span><b>UPI Help (ODR)<\/b><span style=\"font-weight: 400;\"> feature in the app.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Flexible Repayment<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Repayments can be done via:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Direct payments to the UPI ID linked to the credit line.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><b>AutoPay (e-mandates)<\/b><span style=\"font-weight: 400;\"> for automatic deductions, if applicable.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span style=\"font-size: 16pt;\"><b>Benefits of UPI Credit Line<\/b><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Instant Convenience : <\/b><span style=\"font-weight: 400;\">Provides instant credit for quick and seamless payments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Boosts Financial Inclusion : <\/b><span style=\"font-weight: 400;\">Helps <\/span><b>&#8220;new-to-credit&#8221; customers<\/b><span style=\"font-weight: 400;\"> access formal credit systems.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Supports Economic Growth : <\/b><span style=\"font-weight: 400;\">Enables smooth transactions, promoting business growth and reducing barriers to credit access.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+CSE+Books\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC CSE Books From PW Store<\/span><\/a><\/span><\/p>\n<div class=\"vc_table_green\"><\/p>\n<table style=\"width: 99.7979%;\">\n<tbody>\n<tr>\n<th style=\"width: 100%; border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle;\">\n<h2><span style=\"font-size: 18pt; color: #000000;\"><b>What Are SFBs?<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">SFBs are <\/span><b>specialized banks licensed by the RBI<\/b><span style=\"font-weight: 400;\">.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">They cater to <\/span><b>low-income individuals<\/b><span style=\"font-weight: 400;\"> and <\/span><b>underserved communities<\/b><span style=\"font-weight: 400;\">.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">Offer services like <\/span><b>microfinance<\/b><span style=\"font-weight: 400;\">, <\/span><b>micro-enterprise loans<\/b><span style=\"font-weight: 400;\">, and other basic banking products.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">SFBs receive <\/span><b>scheduled bank status<\/b><span style=\"font-weight: 400;\"> after meeting operational requirements as per <\/span><b>Section 42 of the RBI Act, 1934<\/b><span style=\"font-weight: 400;\">.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Example: <\/b><span style=\"font-weight: 400;\">Capital Small Finance Bank, Ujjivan, Utkarsh etc<\/span><\/span><\/li>\n<\/ul>\n<h3><span style=\"font-size: 16pt; color: #000000;\"><b>Objective of SFBs<\/b><\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\"><b>Enhance Financial Inclusion<\/b><span style=\"font-weight: 400;\">:<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">Provide savings options to <\/span><b>unserved and underserved<\/b><span style=\"font-weight: 400;\"> sections of society.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400; color: #000000;\">Offer credit to:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400; color: #000000;\">Small business units<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400; color: #000000;\">Small and marginal farmers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400; color: #000000;\">Micro and small industries<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400; color: #000000;\">Other entities in the unorganised sector<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">Operate using <\/span><b>high-tech and low-cost<\/b><span style=\"font-weight: 400;\"> models.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span style=\"font-size: 16pt; color: #000000;\"><b>Key Features of SFBs<\/b><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Registration<\/b><span style=\"font-weight: 400;\">:<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">Registered as a <\/span><b>public limited company<\/b><span style=\"font-weight: 400;\"> under the<\/span><b> Companies Act, 2013<\/b><span style=\"font-weight: 400;\">.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Licensing<\/b><span style=\"font-weight: 400;\">:<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">Licensed under <\/span><b>Section 22 of the Banking Regulation Act, 1949<\/b><span style=\"font-weight: 400;\">.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Capital Requirement<\/b><span style=\"font-weight: 400;\">:<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><b>Minimum paid-up voting equity capital<\/b><span style=\"font-weight: 400;\"> of <\/span><b>\u20b9200 crore <\/b><span style=\"font-weight: 400;\">is required.<\/span><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">For SFBs converted from <\/span><b>Urban Cooperative Banks<\/b><span style=\"font-weight: 400;\">, the capital requirement may differ.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>Priority Sector Lending (PSL) Norms<\/b><span style=\"font-weight: 400;\">:<\/span><\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">SFBs must allocate <\/span><b>75% of their Adjusted Net Bank Credit (ANBC)<\/b><span style=\"font-weight: 400;\"> to priority sectors as defined by the RBI.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"color: #000000;\"><b>The guidelines for small finance banks provide inter-alia that<\/b><\/span><\/p>\n<ul>\n<li aria-level=\"1\"><span style=\"color: #000000;\"><b>Promoters:<\/b><span style=\"font-weight: 400;\"> Promoters can include resident individuals or professionals with at least 10 years of experience in banking and finance.\u00a0<\/span><\/span>\n<ul>\n<li><span style=\"font-weight: 400; color: #000000;\">Companies controlled by such individuals are also eligible.<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000000;\"><b>Focus area:<\/b><span style=\"font-weight: 400;\"> Primarily offer basic banking services.\u00a0<\/span><\/span><\/li>\n<li><span style=\"color: #000000;\"><b>Regulatory compliance:\u00a0 <\/b><span style=\"font-weight: 400;\">SFB must follow all norms and regulations applicable to commercial banks.<\/span><\/span><\/li>\n<li><span style=\"font-weight: 400; color: #000000;\">It comprises maintaining ratios\u00a0<\/span>\n<ul>\n<li aria-level=\"2\"><span style=\"color: #000000;\"><b>Cash Reserve Ratio (CRR).<\/b><\/span><\/li>\n<li aria-level=\"2\"><span style=\"color: #000000;\"><b>Statutory Liquidity Ratio (SLR)<\/b><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><\/div>\n<div class=\"vc_table_green\"><\/p>\n<table style=\"width: 99.6375%;\">\n<tbody>\n<tr>\n<td style=\"width: 111.19%; text-align: center;\" colspan=\"2\"><span style=\"font-size: 18pt;\"><b>Also Read<\/b><\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 49.797%; text-align: center;\"><a href=\"https:\/\/pwonlyias.com\/stage\/editorial-analysis\/\" target=\"_blank\" rel=\"noopener\"><b>UPSC Daily Editorials<\/b><\/a><\/td>\n<td style=\"width: 61.393%; text-align: center;\"><a href=\"https:\/\/pwonlyias.com\/stage\/daily-current-affairs\/\" target=\"_blank\" rel=\"noopener\"><b>UPSC Daily Current Affairs<\/b><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 49.797%; text-align: center;\"><a href=\"https:\/\/pwonlyias.com\/stage\/quiz\/\" target=\"_blank\" rel=\"noopener\"><b>Daily Current 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<\/p>\n","protected":false},"author":11,"featured_media":145975,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"tags":[],"paper-wise":[],"subject":[],"acf":[],"_links":{"self":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/145995"}],"collection":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs"}],"about":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/types\/current-affairs"}],"author":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/comments?post=145995"}],"version-history":[{"count":2,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/145995\/revisions"}],"predecessor-version":[{"id":145997,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/145995\/revisions\/145997"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media\/145975"}],"wp:attachment":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media?parent=145995"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/tags?post=145995"},{"taxonomy":"paper-wise","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/paper-wise?post=145995"},{"taxonomy":"subject","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/subject?post=145995"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}