Credit line on UPI: From RuPay cards to pre-sanctioned loans—how it works and what users need to know

UPI users can use certain pre-sanctioned credit lines as a source of funds, allowing eligible customers to make payments through UPI using borrowed money instead of the balance in their bank account.

However, this is not an entirely new facility. RuPay credit cards can already be linked to UPI for eligible merchant payments, while credit-linked UPI products have also been introduced in the market.

The NPCI's UPI Consolidated Circular released on 18 September has mentioned the framework for using both interest-free and interest-bearing credit lines across UPI.

The circular states that “UPI supports inclusion of pre-sanctioned credit lines as a source of funds” and that credit on UPI will provide a “seamless, UPI-enabled credit lifecycle experience for users.”

In simple terms, it allows an eligible user to connect a pre-approved credit facility to a UPI app and use it for permitted payments.

For example, suppose your bank gives you a ₹ 50,000 pre-sanctioned credit line. Instead of first transferring money to your savings account, you may be able to select that credit line while making an eligible UPI payment.

The user will then have to repay the amount according to the terms of that credit facility.

This means users should not assume that every credit on a UPI transaction is interest-free. The cost of borrowing will depend on the specific credit facility.

The framework permits credit on UPI to be used across several UPI features, including merchant payments, EMI transactions, UPI AutoPay, and UPI Reserve Pay, subject to the type of credit line and the issuer's conditions.

“Members shall standardise the account subtype and account reference number (as per the detailed guidelines laid down in the product document) to harmonise the user experience, reducing friction at the point of payment, and enabling scalable adoption of Credit on UPI,” according to the circular.

Members and UPI application providers have been given 15 December 2026 as the deadline for implementation.

The issuer will continue to decide who receives the credit, the applicable terms, permitted uses and whether a transaction is approved.

Disclaimer: This is for informational purposes only. Please visit the official website for the latest updates.

Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends.