The National Payments Corporation of India (NPCI) issued a circular on July 10, 2025, regarding the use of credit lines through UPI. As per the directive, from August 31, 2025, financial institutions and banks will enable overdraft or credit line facilities to be linked with UPI.

This means users will now be able to withdraw or transact money from their loan-backed accounts. These credit lines or overdraft facilities can be issued against gold, property, fixed deposits (FDs), mutual funds, or shares and can be linked to UPI via popular apps like PhonePe, Paytm, Google Pay, and more.

Who Is Eligible for a Credit Line Facility on UPI?

The eligibility for availing a credit line facility via UPI depends on the lender’s policies and the customer’s financial profile. Based on available norms across leading institutions and RBI-backed guidelines, here’s who typically qualifies:

Criteria	Details
Credit Score	Generally above 700 (varies by bank/NBFC)
KYC Compliance	Full KYC required with PAN, Aadhaar, and income proofs
Existing Relationship	Preferably existing customers with savings, FDs, or securities linked
Collateral-backed Loans	Loans against gold, property, FDs, shares, mutual funds, etc.
Repayment History	Good repayment track record for past loans/credit cards
Income/Business Profile	Salaried or self-employed individuals with regular income sources

Note: Final eligibility is determined by the lender’s risk evaluation policy and RBI/SEBI compliance standards.

What Is the New UPI Notification by NPCI?

The new NPCI circular allows broader integration of loan-based accounts with UPI. From September 2025, individuals can use their credit lines, sanctioned against assets like FDs, shares, bonds, properties, or gold, to make everyday UPI payments.

Essentially, this means your UPI apps can now access and use sanctioned loan funds, and not just traditional savings/current accounts.

The credit line account, once linked, will allow seamless Scan & Pay, UPI ID, or contact-based transfers, offering flexibility to both personal and business users.

Mandatory Implementation Deadline: All UPI member banks, PSPs (Payment Service Providers), credit line issuers, and third-party app providers (TPAPs) must implement this by August 31, 2025.

Read More – What Is a UPI ID? Meaning, Format & How To Create Or Find It

What Kind of Transactions Are Allowed on UPI Credit Line Facility from August 31, 2025?

Until now, UPI credit line use was restricted to P2M (Person-to-Merchant) transactions only. The new update widens the scope significantly.

Allowed Transactions (Post August 31, 2025)

P2P (Person-to-Person) Transfers
P2PM (Person-to-Person Merchant) Payments
Cash Withdrawals
Scan & Pay, Pay to UPI ID, IFSC Transfers, and more

Note: P2PM refers to transactions with small merchants, with monthly UPI collections under ₹50,000.

Transaction Type	Previous Guideline	New Guideline (From Aug 31, 2025)
P2M (Merchant)	Allowed	Allowed
P2P (Personal)	Not Allowed	Allowed
P2PM (Small Merchant)	Not Allowed	Allowed (₹50,000 monthly collection)
Cash Withdrawal	Not Allowed	Allowed (₹10,000 daily cap)

Limits Apply:

₹1 lakh per day for P2P and P2M combined
₹10,000/day cash withdrawal cap
Max 20 P2P transactions/day
Actual limits may vary by bank’s internal policies

However, availability of these features depends on the issuing bank’s discretion. Banks can decide which transaction types are enabled, based on legal, risk, and regulatory factors.

What Is a Credit Line?

A credit line is a pre-approved loan amount that you can withdraw from as needed, and pay interest only on the used amount, not the total sanctioned limit.

Example: Meet Rohit

Rohit, a salaried professional, pledges his ₹5 lakh fixed deposit as collateral and is sanctioned a ₹4 lakh credit line from his bank.

Sanctioned Limit: ₹4,00,000
Used: ₹1,00,000 via UPI in September
Interest Rate: 9% p.a.
Interest Charged (only on ₹1L): ₹750/month (approx.)
Repayment Flexibility: He can repay ₹50,000, reuse again, or repay full anytime

This flexibility helps users manage short-term cash needs, while preserving savings/investments like FDs, gold, or mutual funds.

Also Read - My UPI Transaction Failed, But Money Was Debited!"

How to Apply for a Credit Line Facility on My Bank Account?

You can apply for this facility both online and offline depending on the bank. Here's how:

Steps to Apply:

Login to Net Banking / Mobile App
Look for “Loan Against Assets” or “Credit Line via UPI”
Choose Asset Type
Select FD, shares, MF, gold, or property for collateral
Upload Documents
PAN, Aadhaar, bank details, asset documents
Approval and Limit Sanctioned
Based on asset valuation and credit profile
Link Account to UPI App
Once approved, select UPI app to link the credit line account
Start Using for UPI Payments
Scan, send, or withdraw—based on allowed transaction types

Tip: Contact your bank’s customer support to know if your account qualifies and whether they’ve enabled this service as per NPCI’s circular.

Conclusion

The NPCI’s new guidelines on UPI-linked credit lines represent a major leap in digital financial flexibility for Indian consumers. By allowing loans secured against FDs, gold, property, and more to be accessed via UPI, the system removes friction in borrowing and empowers individuals and businesses with on-demand liquidity.

As the August 31, 2025 deadline approaches, banks, app providers, and payment gateways are expected to roll out the required infrastructure. If you're someone with valuable financial assets or an existing loan account, it might be time to explore how you can unlock its value, one UPI transaction at a time.

Other News Pages
Big Govt Payments to Move via RBI e-Kuber from July 16	RBI Ends Prepayment Penalties, Relief for Small Borrowers	RBI Fines HDFC Bank & Shriram Finance for Compliance Lapses	Indian Banks’ Role in Empowering Women SHGs Highlighted
Centre Disburses ₹30,000 Crore Interest-Free Capex Loans to States	Equitas Small Finance Bank May Raise Capital via NCDs on July 21	Maharashtra: Online Hypothecation Removal for Vehicle Loans Explained	Loan via UPI Soon: Withdraw Credit from Gold, FDs, Property
RBI’s Record Fund Infusion Fails to Boost Loan Growth	ADB Approves ₹975 Crore Loan for Industrial Infra in Tripura	Ex-ICICI CEO Chanda Kochhar Guilty in Videocon Loan Case	Private Banks See Spike in Bad Loans from Agri & Small Lending
RR District Re-Launches Loan Scheme for Persons with Disabilities	No GST Rate Cut Yet, Final Call with GST Council	JPMorgan May Launch Loans Backed by Bitcoin, Stablecoins	Wilful Defaulters Owe ₹1.62 Lakh Crore to PSU Banks: Govt
Laxmi India Finance to Raise ₹254 Crore via IPO from July 29	Raghuram Rajan Urges Focus on Local Governance in Finance Panel	Agri Loans Cross ₹28 Lakh Crore; Govt Denies Waiver Plans	Petronet Seeks ₹12,000 Crore Local Loan for LNG Projects