Key Highlights:
- From August 2025, UPI users can use credit lines for cash withdrawal, P2P transfer, and merchant payments.
- NPCI’s new circular mandates all banks and apps to enable this by August 31, 2025.
- Pre-approved loan/credit line accounts can now be linked to UPI apps like Google Pay, PhonePe, and Paytm.
Mumbai: There’s good news for crores of users who use the Unified Payments Interface (UPI). Starting next month, i.e., August 2025, the amount from the bank's pre-approved credit line can also be used easily. Until now, only purchases were allowed. In fact, the National Payments Corporation of India (NPCI) recently issued a circular. In this NPCI circular, new rules were mentioned for linking the credit line.
Direct Payments from Loan Account
Under these new rules, UPI users will now be able to link fixed deposits, shares, bonds, property, gold, or personal and business loan overdrafts to the Unified Payments Interface (UPI) and use them. This means users can now make direct payments from their loan accounts through third-party UPI applications like Paytm, PhonePe, and Google Pay.
NPCI Issued a New Circular
According to the new circular by the National Payments Corporation of India, payments via UPI from credit lines can now be made not only at stores but also for cash withdrawals, sending money to others, and paying small merchants. Earlier, credit lines could be used via UPI only for store payments, but now loan overdrafts can also be linked and used with UPI.
Service to Start Next Month?
NPCI has directed all UPI member banks, payment service providers, credit line institutions, and third-party app providers to implement these changes by August 31, 2025. Hence, crores of UPI users will be able to benefit from this facility starting next month.
What is a Credit Line?
It is noteworthy that a credit line is a type of loan. This loan is approved by a bank or financial institution based on your income and credit score. You can link a bank’s pre-approved credit line account with UPI and use it as per your needs, then repay it later.
