The National Payments Corporation of India (NPCI) has issued new rules for using pre-approved credit lines through UPI. According to the guidelines:
Banks (known as Issuers) will set the terms and conditions for using these credit lines.
These must follow the bank’s internal policies, RBI regulations, legal requirements, and the specific purpose for offering interest-based credit.
Banks will have the authority to approve or reject UPI transactions based on the credit purpose and existing rules.
All UPI member banks, Payment Service Providers (PSPs), and third-party apps have been instructed to add more Merchant Category Codes (MCC) to support transactions using interest-bearing account types.
What is a Pre-Approved Credit Line?
A pre-approved credit line is a facility offered by banks or financial institutions where a customer gets a fixed borrowing limit in advance. This means:
Customers don’t need to apply every time they want to borrow.
For example, if someone has a credit line of ₹1 lakh, they can make payments through QR code or UPI ID using that limit.
The key benefit is that no interest is charged until the customer actually uses the money.
