If the bank has provided this facility to someone for a specific need, then it must be used for that need only. NPCI has directed all banks, payment companies, and app companies to implement these changes.
A major change is going to happen soon in an important transaction related to UPI. Under this, the loan amount (credit line) already sanctioned in the UPI wallet will now be used only for the same purpose for which the bank had sanctioned that loan. The new rule will come into effect from 31 August 2025. Here is the report of Hindustan Bureau…
National Payments Corporation of India (NPCI) has recently issued a circular in this regard. It states that now the customer can use the credit line on UPI for the same purpose for which he has got it sanctioned from the bank.
This means that if the bank has provided this facility to someone for a specific need, then it must be used for that need only. NPCI has directed all banks, payment companies, and app companies to implement these changes.
This is why the change was made
The facility of adding a credit line on UPI was given earlier, but its control and monitoring system was weak. Many times it was seen that customers do not use this loan for the purpose for which it is approved. This was affecting both the banking system and consumer security. NPCI says that new rules are being implemented to prevent misuse of this facility.
What is the credit line facility
Earlier, only savings account, wallet or RuPay credit card could be added through UPI, but later the credit line facility was also added. This is a kind of loan, which is pre-approved by the banks for their customers. In this, just like a credit card, a fixed amount is set for the customer to spend. If the user does not have money in his savings account or UPI wallet, then he can use this amount of loan for payment if needed. Banks charge interest only on the amount spent.
What are the new rules
1. Correct use of loan: The loan should be used for the purpose for which the bank has approved it. For example, if someone has taken a loan for studies, then they will not be able to spend it anywhere else through UPI.
2. The role of the bank will be important: The bank will decide which transaction should be approved and which should not. The bank will take this decision keeping in mind its policy and the purpose of that loan.
3. Monitoring of all transactions: If the customer uses that credit line for the wrong purpose, then the bank will be able to stop it. This arrangement is considered to be the biggest feature of this new system.
4. Changes will be made in the app: All banks, UPI payment service providers and app companies will have to add new codes to make it easier to use the interest-bearing credit line.