UPI Credit Line is a new digital payment feature that allows payments to be made using UPI even without a bank balance. Major banks are preparing to implement it. So, learn how this feature works, its benefits, risks, and the correct way to use it.
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UPI Credit Line: 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 using 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?
The 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 is just like you make payment through credit card, the only difference is that here the card is not required. Although NPCl started this facility in September 2023, but now for the first time big banks are going to implement it on a large scale. In simple words, this is a kind of micro-loan, for which the banks will decide the interest rate. But the interest will depend on the bank and the limit. Along with this, there will be no need of a card for this, customers will be able to use the credit limit directly on the UPI app.
Why are banks stepping 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 will the benefits be for customers?
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
You can make payments even if you don’t have enough money in your account.
2. Small credit available instantly
Even without a credit card, small credit amounts of around ₹1,000-₹20,000 can be easily accessed.
3. Cardless—Direct access through the UPI app
You’ll be able to access credit simply by scanning the UPI app or accepting payment requests.
4. Build a credit history
Making timely payments will improve your CIBIL score, which will lead to:
Affordable loans
Great credit cards
Easy EMI options.
What are the benefits to banks?
This feature is the easiest way for banks to reach new customers.
Most people use UPI.
Even those who don’t yet have a credit card will avail 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.
