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India’s latest fintech update lets users borrow small amounts of money directly through UPI.
Why it could be a game-changer for digital payments. (Representative Image)
Unified Payments Interface (UPI) has already changed how we send and receive money in India. Now, it is going a step further with a new feature called the UPI credit line.
UPI Credit Line: What is it?
This feature allows users to borrow money and use it through UPI apps like PhonePe, Google Pay, or Paytm, just like paying with a bank account.
Launched by the Reserve Bank of India (RBI), this service helps people without credit cards or personal loans access formal credit easily.
UPI Credit Line: How Does It Work?
A UPI credit line is a pre-approved loan from your bank. But instead of receiving the full loan amount in your account, you can use the money bit by bit through UPI when needed.
You can pay for shopping, bills, or services by scanning a QR code or entering a UPI ID, and then repay the borrowed amount later based on the terms.
UPI Credit Line: How Is It Different from Credit Cards or BNPL?
This feature is like a credit card because you use money you don’t already have. But it is simpler—no physical card, lower setup costs, and linked directly to your UPI ID.
It is also different from Buy Now, Pay Later (BNPL), which is usually offered by fintech companies and only works with selected merchants.
UPI credit lines are bank-approved, more reliable, and accepted anywhere UPI is.
UPI Credit Line: Who Can Use It and How to Apply?
Currently, only some banks like HDFC Bank, ICICI Bank, and Axis Bank are offering this feature to selected users. To qualify, you may need a good credit score or a prior relationship with the bank. You can check for offers in your bank’s app or UPI app.
If eligible, you will need to fill out a digital form and accept the repayment terms. Once approved, the credit line shows up just like a bank account in your UPI app.
UPI Credit Line: Interest Rates and Repayment
Banks charge interest only on the amount you use, not the full approved limit. The interest rate and repayment period depend on the bank and your credit profile.
Some banks may offer EMIs or interest-free days for short periods. Unlike credit cards, you may not get cashback or rewards, but the process is faster and cheaper.
UPI Credit Line: Why It Matters?
The UPI credit line makes borrowing easier, especially for people in smaller towns or those without credit cards. It helps with small purchases, emergencies, or bill payments.
For merchants, it means more sales as customers get more flexibility. For banks, it opens up a new group of digital borrowers with lower costs.
Overall, it is a big step toward a cashless, credit-friendly future in India.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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Delhi, India, India
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