The Reserve Bank of India has amended its directions on credit facilities for small finance banks by inserting a new chapter on credit facilities linked to specific payment instruments. The amendment is intended to ensure consistent regulatory treatment of products such as pre-sanctioned credit lines used for Unified Payments Interface transactions, and clarifies that prudential treatment must be based on the nature of the underlying credit facility rather than the delivery channel, payment instrument or technology used. Any credit facility designed to be linked to a specific payment mode must have its terms and conditions built into the bank's credit policy and must comply with all other applicable regulatory requirements. The amendment also clarifies that only credit facilities already permitted under existing regulations may be offered through such arrangements, and that these instructions do not override other laws or regulations applicable to transactions executed through payment mechanisms. The changes take effect immediately.
Reserve Bank of India2026-06-23
Reserve Bank of India amends small finance bank credit rules for UPI-linked pre-sanctioned credit lines
The Reserve Bank of India has amended small finance bank credit rules to clarify the treatment of credit facilities linked to payment instruments, including pre-sanctioned UPI credit lines. Prudential treatment will depend on the underlying credit facility, not the payment channel or technology used. The changes require such products to be covered in banks' credit policies and take effect immediately.