RBI closes UPI credit-line arbitrage, forces bank-grade rules on fintech BNPL rails
India's central bank will apply traditional loan prudential norms to UPI-linked credit lines, ending the lighter-touch regime fintechs and banks used to undercut credit cards. The move raises capital and provisioning costs for BNPL-on-UPI products and narrows the economics of a fast-growing consumer credit channel.
RBI mandates uniform prudential treatment for UPI-linked credit lines, ending regulatory arbitrage versus traditional loans. Impacts BNPL-style products on UPI rails, raising costs for banks and fintechs building UPI credit as a cheaper alternative to credit cards.