Credit Card Spending Via UPI At INR 10K Cr Per Month: NPCI

SUMMARY

NPCI MD & CEO Dilip Asbe said that credit lines on UPI account for nearly INR 100 Cr to INR 200 Cr of the INR 10,000 Cr credit card spends every month

Asbe also said that the objective of CBDC is not to compete with the UPI as the former boasts features like programmability

In June, the central bank raised concerns over high levels of delinquency being seen by fintech lenders for small loans below INR 50,000

National Payments Corporation of India (NPCI) managing director and CEO Dilip Asbe has said that credit card spending via Unified Payments Interface (UPI) has touched the INR 10,000 Cr per month milestone.

Asbe also said that credit lines on UPI account for nearly INR 100 Cr to INR 200 Cr of these total spends every month, news agency PTI reported.

It is pertinent to note that NPCI’s credit card offering allows users to link their credit card with UPI and add all their UPI payments to their monthly credit card bills. Meanwhile, credit lines on UPI allow users to avail small-ticket size, pre-approved loans over short tenures.

Asbe said that while credit line on UPI is yet to pick up pace, the NPCI is not worried about the same as the offering would scale up “eventually”.

He added that ICICI Bank is the biggest bank in the space and has disbursed the biggest chunk of credit lines on UPI. As per the report, other banks too are expected to follow suit as they look to roll out small loans against fixed deposits to new customers.

The move to offer credit on deposits is seen by many as a cost-efficient way to provide loans.

An Economic Times report added that banks are also mulling partnering with non-banking financial companies (NBFCs) or other fintechs to scale up the distribution of credit lines on UPI. With this, the financial institutions could be looking to leverage the network of fintechs to further increase the penetration of the product.

The comments come at a time when the Reserve Bank of India (RBI) has flagged high growth in unsecured loans, including credit cards and personal loans. In June, the central bank raised concerns over high levels of delinquency being seen by fintech lenders for small loans below INR 50,000.

In March, a report by brokerage firm Bernstein said that a sharp rise in unsecured lending by Indian banks and fintechs led to the RBI tightening lending norms late last year.

Meanwhile, Asbe, speaking on Tuesday, also added that UPI is witnessing immense growth and ready for the next stage of growth.

On central bank digital currency (CBDC), he said that the objective of the state-backed online currency is not to compete with the UPI as the former boasts features like programmability.

Asbe’s comments come at a time when UPI continues to see healthy traction. In June, the payments infrastructure clocked 1,444 Cr transactions worth INR 20.6 Lakh Cr, up 3.95% and 2.8% month-on-month (MoM), respectively.