If you are a frequent user of UPI, it is recommended to stay abreast of the changes made in the digital payment ecosystem. NPCI, which runs UPI, issued a circular dated July 10 introducing some new guidelines with regards to pre-sanctioned credit lines.
Before that, let us first understand some background. In September 2023, NPCI issued a circular allowing the pre-sanctioned credit lines to be enabled on UPI (Unified Payments Interface).
Earlier only savings accounts, overdraft accounts, prepaid wallets and Rupay credit cards could be linked. But later, the scope of UPI was broadened to include credit lines as a funding account as well.
Under that facility, payments made through a pre-sanctioned credit line issued by a scheduled commercial bank to individuals with prior consent of the individual customer are enabled for transactions using the UPI system.
Now the latest circular dated July 10, 2025 has incorporated more changes to the earlier facility.
The National Payments Corporation of India (NPCI) said in the circular that the customer experience to be made consistent across interest bearing credit lines and end use of such pre-sanctioned credit lines being linked to UPI will be aligned with the purpose for which loan was granted.
These are some of the additional guidelines:
I. Issuers will stipulate terms and conditions of use of such credit lines. The issuer will also ensure compliance of use of such credit lines. The issuer will also ensure compliance with extant regulatory guidelines, Bank policy, legal requirements, and the defined purpose of such interest bearing credit line offering.
II. Issuer will approve or decline transactions initiated via UPI as per extant regulatory guidelines, and defined purpose of the credit.
III. All UPI member banks, sub members, PSPs (payment service providers) and the third party app providers will enable additional MCCs for transactions through interest bearing account types.
The circular signed by Kunal Kalawatia, chief of products, NPCI, reads that all UPI member banks, sub members, PSPs, credit line issuers and third party app providers are instructed to implement these changes before Aug 31, 2025.
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