UPI Credit Line: What is UPI Credit Line? You may not know about it...understand the correct way to use it..

In this era of digital payments, UPI has become a vital part of our lives. Just as UPI has simplified our daily lives, a new feature is about to be added: UPI Credit Line. Major private banks like Axis Bank, HDFC Bank, and Kotak Mahindra Bank are now preparing to launch this service. This means that in the near future, customers will be able to make payments through UPI even without a balance in their bank account. The question now arises: what is this UPI Credit Line, how significant is this change, and who will benefit from it? So, without further delay, let's understand the full story in detail.

What is a UPI Credit Line?
UPI Credit Line is essentially a small credit line where banks allow users to borrow up to a certain amount. This means that even if your bank account balance is zero, you can still make payments through UPI. However, you may have to repay this amount with interest later. It's just like making payments with a credit card, except that a card isn't required. While NPCI launched this feature in September 2023, major banks are now implementing it on a large scale for the first time. Simply put, it's a type of micro-loan, for which banks will determine the interest rate. However, the interest rate will depend on the bank and the limit. Furthermore, it doesn't require a card; customers can access their credit limit directly through the UPI app.

Why have banks stepped in now?

For several months, banks were hesitant about this new system. The reasons were: how would the interest rate be determined? Would there be an interest-free period? How would small loans be recovered?

Now that the RBI and NPCI have clarified the guidelines, banks have begun preparing rapidly. According to reports, HDFC Bank and Axis Bank may launch this product in collaboration with other fintech companies.

What benefits will customers expect?

UPI Credit Line can be helpful for ordinary users in several ways:

1. Instant payments when needed

Sometimes unexpected expenses arise—
• Medical emergencies
• Online bookings
• Instant payments at stores
• Bill payments

Even if you don't have money in your account, you can still make payments.

2. Small credit available instantly

Even without a credit card, small credit amounts of around ₹1,000–₹20,000 can be easily obtained.

3. Cardless access—direct use through the UPI app

You can access credit by simply scanning the UPI app or accepting payment requests.

4. Build a credit history

Making timely payments will improve your CIBIL score, which will ultimately lead to:

Affordable loans

Great credit cards

Easy EMI options.

What benefits do banks have?

This feature is an easy way for banks to reach new customers.

Most people use UPI.

Even those who don't yet have a credit card will avail themselves of a credit line.

Customers who repay small loans on time will become large, reliable customers for the bank in the future.

What will change in the future?

UPI Credit Line could completely transform services like:

Pay Later
Micro Loans
Instant Shopping Credit

India is already a leader in digital payments, and now credit lines will take it to a new level.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.