After a long wait, big banks like HDFC Bank, Axis Bank, and Kotak Mahindra Bank are finally rolling out credit payments via UPI.
Earlier, banks relied on RuPay credit cards to boost credit usage on UPI.
Now, they are introducing direct credit lines on UPI, allowing users to make both small and large payments on credit without needing a card.
This move could make UPI even more convenient for everyday transactions and help banks reach more customers.
Why the Delay? And What Changed
The credit line feature was launched by the National Payments Corporation of India (NPCI) in 2023, but for two years, few banks adopted it.
Only Karnataka Bank and Suryoday Small Finance Bank, in collaboration with Navi and Paytm, started offering it early on.
Big banks were hesitant due to unclear rules about interest rates, interest-free periods, and repayment terms.
Now, NPCI and the Reserve Bank have provided all necessary clarity, giving major banks the green light to launch these products.
Early Adoption and Growth Potential
Currently, around 3 to 4 lakh customers have used UPI-based credit lines.
While the number of transactions is small compared to regular UPI payments, it’s growing quickly.
Banks see this as a huge opportunity to bring new users into the banking system.
Customers who repay small credit line loans on time can become reliable, long-term clients.
With millions of UPI users making daily payments, this feature could help banks expand their customer base significantly.
Risks and Cautions
Despite the promise, banks are cautious. Small loans can be tricky to recover if customers fail to pay on time.
Each bank is assessing the risks carefully before offering the credit line widely.
Still, the UPI credit line could revolutionize everyday digital payments, making it easier for people to spend on credit while opening new opportunities for banks.
