New Delhi: After a long wait, major private banks such as Axis Bank, HDFC Bank and Kotak Mahindra Bank are now preparing to introduce credit payments through UPI. Until now, banks have been offering RuPay credit cards enabled for UPI, but the next big upgrade—“Credit Line on UPI”—is finally set to roll out.
What’s the Current Preparation?
According to sources quoted by ET, Axis Bank and HDFC Bank are working with fintech startups to launch this product.
Startups like Navi, SuperMoney and SalarySe are in advanced discussions to partner with these banks for offering the UPI-based credit line.
All three banks—HDFC, Axis and Kotak Mahindra—declined to comment officially.
Why Were Banks Hesitant Earlier?
People familiar with the matter said banks wanted clarity on key issues before launching the facility:
- Applicable interest rates
- How interest will be recovered
- How long a no-interest (grace) period can be offered
- Practical challenges in collecting multiple small-ticket loans made over UPI
A senior private sector banker admitted that recovering small loans given via UPI would be a major operational challenge.
Why Are Banks Interested Now?
A senior official from a Delhi-based payments platform explained that banks see this as an opportunity to:
- Acquire new customers, especially those seeking instant credit
- Identify high-quality borrowers who repay on time
- Expand their reach through digital lending platforms
He said this product could become a large customer acquisition tool for private banks.
What Exactly Is the UPI Credit Line?
Many times, you need to make an urgent payment but don’t have enough balance in your bank account.
The UPI Credit Line allows you to complete such payments even without sufficient bank balance.
It works like a digital credit facility directly linked to your UPI ID.
You borrow instantly and repay later—with interest, depending on the bank’s terms.
The National Payments Corporation of India (NPCI) launched this product in September 2023.
Karnataka Bank and Suryoday Small Finance Bank were the first lenders to offer this facility in partnership with Navi and Paytm.
How Will It Help You?
- Instant payments even without available balance
- No need for a credit card
- Small-ticket emergency loans become easier
- Fast approval and repayment directly through UPI
- Useful for daily expenses, bill payments and e-commerce transactions
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