The National Payments Corporation of India (NPCI), which operates UPI, issued a circular on July 10 introducing new guidelines regarding pre-sanctioned credit lines. The NPCI has instructed all UPI member banks, sub-members, PSPs, credit line issuers and third-party app providers to implement these changes before August 31, 2025.
In September 2023, NPCI issued a circular enabling the operations of pre-sanctioned credit lines on UPI.
The UPI system was initially limited to savings accounts, overdraft accounts, prepaid wallets and Rupay credit cards. This was expanded to include credit lines as a funding account which enabled transactions made through pre-sanctioned credit lines.
In a circular dated July 10, 2025, the NPCI said, “In order to ensure consistent customer experience across Interest Bearing Credit Lines, end use of such pre-sanctioned credit lines being linked to UPI shall be aligned with the purpose for which loan was granted by the Issuer and the extant regulations applicable in this regard.”
To facilitate the same, the NPCI issued the following additional guidelines for the interest-bearing credit liners.
1. Issuers will stipulate the terms and conditions 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.
2. Issuer will approve or decline transactions initiated via UPI as per extant regulatory guidelines and the defined purpose of the credit.
3. All UPI member banks, sub-members, PSPs and the third-party app providers will enable additional MCCs for transactions through interest-bearing account types.
The circular further said that all UPI member banks, sub-members, PSPs, credit line issuers and third-party app providers are instructed to implement these changes before 31 August 2025.
