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Credit Lines via UPI: RBI Expands Funding Options

Current · Source: Reserve Bank of India · RBI/2023-24/58 · issued 04 Sep 2023 · ~1 min read

Quick answerRBI now allows scheduled commercial banks to link pre-sanctioned credit lines to UPI for individual customers, with their consent. This expands UPI funding beyond savings accounts, overdrafts, wallets, and credit cards, enabling direct credit line payments.

The rule, in the simplest words

Scheduled commercial banks can link pre-sanctioned credit lines to UPI with customer consent.
Banks must set board-approved policies for credit line terms like limit, period, and interest rate.
Banks must ensure compliance with Payment and Settlement Systems Act, 2007, Sections 10(2) and 18.

How it plays out — a real example

Rahul, a payments & clearing officer in Indore, helps a customer, Mr. Kumar, to link his pre-sanctioned credit line to UPI. With this, Mr. Kumar can now make payments directly from his credit line using UPI, making transactions more convenient and efficient. A payments & clearing officer in Indore enables a customer to link their pre-sanctioned credit line to UPI for easy transactions.

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

❓ Common questions

Regulatory timeline

Stated effective date effective from September 4, 2023
Decoded by BankPulse 2026-06-18 04:25 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

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.

📜 Read the original circular — full text as issued by RBI

RBI/2023-24/58
 CO.DPSS.POLC.No.S-567/02-23-001/2023-2024
 September 04, 2023
 (Updated as on February 12, 2025) 
 The Managing Director / Chief Executive Officer
 Scheduled Commercial Banks (excluding Payment Banks 1 and Regional Rural Banks)
 Madam / Dear Sir,
 Operation of Pre-Sanctioned Credit Lines at Banks through Unified Payments Interface (UPI)
 Please refer to the Statement on Developmental and Regulatory Policies dated April 06, 2023 and December 06, 2024 , expanding the scope of UPI by enabling transfer to / from pre-sanctioned credit lines at banks. Currently, savings account, overdraft account, prepaid wallets and credit cards can be linked to UPI. As announced, the scope of UPI is now being expanded by inclusion of credit lines as a funding account.
 2. Under this facility, payments through a pre-sanctioned credit line issued by a Scheduled Commercial Bank to individuals, with prior consent of the individual customer, are enabled for transactions using the UPI System.
 3. Banks may, as per their Board approved policy, stipulate terms and conditions of use of such credit lines. The terms may include, among other items, credit limit, period of credit, rate of interest, etc.
 4. This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
 Yours faithfully,
 (Gunveer Singh)
Chief General Manager-in-Charge
 1 Deleted the phrase “Small Finance Banks”

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/58 · issued 04 Sep 2023. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

⚙️ Operations

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.

💻 IT / Systems

Update UPI systems to support credit line as a funding account with customer consent.

📜 Compliance

Develop board-approved policy for credit line terms including limit, period, and interest rate.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (Scheduled Commercial Banks (excluding Payment Banks and Regional Rural Banks), Individual customers with pre-sanctioned credit lines, UPI ecosystem operators and payment system providers), your first concrete step on “Credit Lines via UPI: RBI Expands Funding Options” is: “Update UPI systems to support credit line as a funding account with customer consent.” (RBI issued this 04 Sep 2023).

Circular: RBI/2023-24/58 -- Credit Lines via UPI: RBI Expands Funding Options
Issued: 04 Sep 2023
Action required: Update UPI systems to support credit line as a funding account with customer consent.
Action required: Develop board-approved policy for credit line terms including limit, period, and interest rate.
Action required: Ensure compliance with Payment and Settlement Systems Act, 2007, Sections 10(2) and 18.
Action required: Communicate new facility to customers and train staff on credit line UPI operations.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12532&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.