What changed
RBI expanded UPI to include pre-sanctioned credit lines as a funding account, effective from September 4, 2023, and updated on February 12, 2025. Previously, only savings accounts, overdraft accounts, prepaid wallets, and credit cards could be linked to UPI. Now, banks can enable credit line transactions via UPI with customer consent.
What it means for you
Banks can now offer UPI-based access to pre-sanctioned credit lines, potentially increasing credit uptake and digital payment usage. This requires banks to set board-approved policies for terms like credit limit, interest rate, and repayment period. It may boost customer engagement but also demands robust risk management for credit lines.
What you must do
- Update UPI systems to support credit line as a funding account with customer consent.
- Develop board-approved policy for credit line terms including limit, period, and interest rate.
- Ensure compliance with Payment and Settlement Systems Act, 2007, Sections 10(2) and 18.
- Communicate new facility to customers and train staff on credit line UPI operations.
Who it affects
Scheduled Commercial Banks (excluding Payment Banks and Regional Rural Banks), Individual customers with pre-sanctioned credit lines, UPI ecosystem operators and payment system providers
Can all banks offer credit lines via UPI?
Only Scheduled Commercial Banks (excluding Payment Banks and Regional Rural Banks) can offer this facility, as per the RBI directive.
Do customers need to give consent for credit line UPI?
Yes, prior consent of the individual customer is mandatory before enabling credit line transactions through UPI.
What terms can banks set for credit line UPI?
Banks can set terms like credit limit, period of credit, and rate of interest as per their board-approved policy.