Q. The Reserve Bank of India (RBI) has allowed the operation of pre-sanctioned credit lines at banks through UPI. Which of the following will be the advantages of allowing UPI to mimic credit cards?
1.Banks do not have to sign up new users as they can provide credit to existing customers.
2.Banks do not have to incur expenses issuing cards, signing up merchants, or deploying swipe machines.
3.It would encourage private lenders to push for UPI mode of payments.
Select the correct answer form the code given below:
Answer: D
Notes:
Explanation –
Statement 1, 2 and 3 are correct. UPI’s advantage over credit cards is that banks do not have to sign up new users as they can provide credit to existing customers. Banks also do not have to incur expenditures in issuing cards, signing up merchants or deploying swipe machines. Private lenders like HDFC Bank, which saw little value in pushing UPI transactions, could get more active as they now have an opportunity to grow their loan books.
Source: The Times of India
