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There is a relief news for customers taking small loans. The Reserve Bank of India (RBI) has issued guidelines, due to which now customers will be able to avail small credit line directly through UPI apps. This facility will be especially beneficial for those who do not have a bank account or for whom it is difficult to reach bank branches.
How to get the benefit?
Experts of the Fintech sector say that banks are planning to make small loans available directly on the UPI platform. For this, apps like PhonePe, Paytm, BharatPe and Navi will be used. Big and small banks like ICICI Bank and Karnataka Bank are preparing to adopt it. The customer’s credit account will be directly linked to the UPI app, through which products like gold loan, loan against fixed deposit, consumer loan and personal loan can be used directly.
RBI’s green signal
Banks had asked RBI many questions for this new product, such as interest-free period, reporting of outstanding amount and method of sending information to credit bureau. RBI has now issued clear guidelines on all issues. After this, its testing has started at the initial level and it will be gradually taken to the customers by the banks.
Role of NPCI
The National Payments Corporation of India (NPCI), which runs the UPI platform, launched the facility of pre-sanctioned credit line in September 2023. Due to technical difficulties, it was not launched by most of the banks earlier. Now the situation has changed and banks have started adopting it. NPCI issued a notification to banks in July 2025 that the credit should be used only for the purpose for which it has been approved.
Importance of Credit UPI
Industry experts say that this move signals the next big phase of UPI. UPI has about 30 crore users, of which 15-20 crore are active. The introduction of credit line is expected to increase the usage of UPI and give it a new momentum. Fintech company Zeta estimates that by 2030, transactions worth up to $1 trillion could take place on UPI.
Risks also exist
A senior bank official says that if credit is not implemented carefully, defaults can increase. Recovering small loans can be challenging, so banks will have to pay special attention to security and monitoring.
This facility will not only provide easy and fast loans to customers, but will also strengthen the digital payment ecosystem. There is news of relief for customers taking small loans. The Reserve Bank of India (RBI) has issued guidelines, so that now customers will be able to avail small credit lines directly through UPI apps. This facility will be especially beneficial for those who do not have a bank account or for whom it is difficult to reach bank branches.
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