Credit Line on UPI – Features, Eligibility, How to Setup

Updated: 11-11-2024 11:28:15 AM

Many people don’t have a credit card to make purchases now and pay once the statement is generated. A higher purchasing power at the grassroot level is also good for the running economy. Most people use UPI these days to carry out daily transactions. Credit Line on UPI has been launched to empower such users to carry out UPI transactions even when they don’t have balance in their bank account.

What is a Credit Line

Credit line is a credit facility offered by banks and other financial institutions to individuals, businesses, and Governments. It enables these entities to use this credit facility to withdraw funds as per their business requirements.

Borrowers of a credit line can use any amount from the total sanctioned credit limit. It is a form of flexible loan in which the interest needs to be paid only on the utilised amount.

What is the Credit Line on UPI

Credit Line on UPI is a pre-sanctioned credit limit that offer seamless UPI payment solutions for its customers. It is a pre-approved credit limit, which is directly linked to the borrower’s UPI ID. It is another form of a secured digital payment solution offered by banks through UPI.

Borrowers can link credit lines as their funding accounts on UPI like their savings, overdrafts, prepaid wallets, and credit cards. A credit line linked to the applicant’s UPI acts as an alternative to credit cards.

There are two variants of Credit Lines on UPI, which leading private and public sector banks offer.

• Secured Fixed deposit Credit Line on UPI
• Unsecured variant Credit Lines on UPI

Also Read: Unified Payments Interface (UPI) 

Features of Credit Line on UPI

Feature	Significance
Pre-approved Credit Limit	You can avail funds as much as you require from the total assigned limit and pay interest only on the utilized amount.
Details of Credit Line	With the help of the UPI app, you can get complete insights on your credit line status, utilized credit line, and existing EMIs.
Instant Access	You shall get instant access to credit and make seamless payments and transactions without paying any extra fee and charges.
Flexible Repayment Options	Borrowers can choose to repay the utilized credit amount in full or in installments depending upon their finances. AutoPay option is also available.
Secure Authentication	You can authenticate transactions with a dedicated UPI PIN for Credit Line on UPI.
Unified Linking	You can explore credit line accounts from the issuer bank based on your registered mobile number and link it to any UPI app.
Transaction Limits	Minimum Limit – Rs. 25,000 Maximum Limit – Rs. 5 Lakh
Variety in Transactions	Borrowers can make payments only to merchants with QR Codes and e-commerce merchants using Credit lines on UPI.
Dispute Resolution	One can resolve disputes conveniently via the ODR (UPI Help) available on UPI apps.

Eligibility for applying for a Credit Line on UPI

The eligibility for a UPI Credit Line depends on the type of credit line offered; and shall vary from lender to lender:

Basic Eligibility Criteria

• Age: Minimum 18 years at the time of loan application
• The credit line is issued by the bank where the applicant is already operating a bank account and where UPI is activated
• Indian citizen with no previous default with any financial institution
• No past criminal record of the applicant

After applying for a credit line, the bank shall evaluate your creditworthiness based on your credit report.

Note: Borrowers can access their UPI credit line through the same app they use to make payments and transfers.

How UPI Credit Line Functions

UPI credit line functions similar to the credit line offered as a credit product by financial institutions.

At first, you have to apply for the UPI credit line through a UPI app.

The bank whose account you are operating for UPI transfer would request your credit report from a bureau, probably CIBIL.

The bank may approve or reject your UPI Credit Line request based on your credit report.

If approved, the bank will assign you a credit line of a specific amount that can be used for UPI transactions.

Every month, a statement would be generated that would contain the transactions, the amount due and the due date.

Once you make the repayment, your overall credit limit is restored and can be used to make the payment the next time.

You have to select the UPI Credit Line as the payment method at the time of making the payment

Which Apps Support Credit Line on UPI

BHIM	CRED
Google Pay	Lazypay
Mobikwik	Navi
Paytm	PayZapp
PhonePe	Tata Neu

Banks that Support Credit Line on UPI

Axis Bank	HDFC Bank	ICICI Bank
Kotak Mahindra Bank	Punjab National Bank (PNB)	State Bank of India (SBI)
Indian Bank	Karnataka Bank	Federal Bank

How to Setup Credit Line on UPI

Follow the below steps to set up a Credit Line on UPI:

Step 1: Open a UPI app on your smartphone, such as BHIM, Paytm, Google Pay, PayZapp or PhonePe.

Step 2: Go to the Credit or Loan section and select the ‘Credit Line option’

Step 3: Enter all the required personal and financial information and complete the KYC verification, if needed

Step 4: Select your respective bank that issues the credit line

Step 5: Enter the 6-digit number and 4-digit PIN for authorisation

Step 6: Set a UPI PIN to start using Credit Line on UPI

How to Remove Credit Line on UPI

The steps to remove a credit line on a UPI is similar for most UPI apps. Follow the below-mentioned steps to remove the credit line from your UPI app:

Step 1: Open the UPI app on your smartphone.

Step 2: Tap on your Profile picture and Set up Payment methods and select Payment methods.

Step 3: Select the credit line you want to remove.

Step 4: Tap on settings and then you can remove the credit line account from the UPI app

How to Reactivate Credit Line on UPI

Once you have removed your UPI Credit Line issued by the bank, you can reinstate the same credit line that you have deactivated. Follow these steps to reactivate your UPI credit line on your UPI app:

Step 1: Open your UPI app where UPI Credit Line was activated earlier

Step 2: In the Payment methods section, select the Credit Line on UPI option

Step 3: Click on the Activate option to reactivate the payment method

Step 4: Follow the instructions on the screen to complete the process and start using Credit Line on UPI again.

Limitations of UPI Credit Line

Below mentioned are some of the limitations that you should know regarding UPI Circle Line:

• The credit line can be used only for the merchant UPI ID payments and not for payments to any Peer-to-Peer (P2P) UPI transactions
• There are few discounts and offers on UPI Credit Line as opposed to credit cards that can offer up to 5% instant discounts on purchases
• Currently, not all banks provide credit line on UPI. Also, many UPI apps still have not started providing this facility on their platforms.
• There are daily and per transaction limits on Credit Line on UPI. In case of credit cards, a user has the option to set the transaction limits based on the available credit limit

Things to Remember when Activating Credit Line on UPI

• Make sure that your respective lending bank supports the credit line feature on UPI
• While activating credit line on UPI, ensure to turn on outgoing SMS services
• Use the same mobile numbers while using single or multiple UPIs via activating credit line
• If using prepaid recharge pack that does not have Outgoing SMS service then contact your operator
• Debit card shall be associated with the credit line
• Check with your bank if the pre-approved credit line is supported or not
• Your credit line approval can be revoked without any information by the provider if there are regular non-payment of dues

Credit Line on UPI or RuPay Credit Card for UPI Transactions

Both options, credit line on UPI and RuPay credit card for UPI transactions have been launched to expand the purview of UPI. They enable users to make UPI transactions even if they don’t have funds in their bank account. However, both options have some advantages over the other. Let us understand some of those:

Some RuPay credit cards provide cashback or reward points on making UPI transactions which is not the case for UPI Credit Line.

Your UPI Credit Line is a virtual product and you don’t have to carry a physical credit card to make transactions using this service.

The approval for a Credit Line on UPI is relatively easier than that of a credit card. It is quick and a user can start using the service almost instantly.

FAQs on Credit Line on UPI

Q. Can I remove the Credit Line on UPI once I start using the service?

Ans. Yes, you are authorized to remove the credit line on your desired UPI app after using it or doing payments and transactions.

Q. Can I avail UPI Credit Line, if I don’t have a CIBIL score?

Ans. Sanctioning of credit lines depends on your creditworthiness and repayment history. It shall solely depend on the respective bank to offer you a credit line or not if you do not have a CIBIL score. 

Q. Can I activate the same UPI Credit Line from a bank on multiple UPI apps?

Ans. Yes, you can use the pre-approved credit line sanctioned by the bank on multiple UPI apps like Google Pay, Paytm, PayZapp, PhonePe, etc. 

Q. Will the UPI Credit Line impact my credit score?

Ans. As long as you are paying all your dues on time, the UPI credit line shall not lower your credit score. However, it may take a small dip when you apply for a credit line as it is considered a hard inquiry by the credit bureaus. 

Q. Can UPI Credit Line help in improving my credit score?

Ans.  All your transactions, including repayments, are reported to the credit bureau by the bank. If used in a disciplined manner, a credit line can help in improving the credit score. 

Q. What is the limit offered by the bank for Credit Lines on UPI?

Ans. The credit limit offered by the bank for credit lines on UPI shall depend on your creditworthiness, income, payment history, credit behaviour, and various other factors. The credit line offered by banks shall differ from applicant to applicant. 

Q. Do I have to maintain the amount in the bank account to transfer funds through the UPI Credit Line?

Ans. You shall have to maintain some amount to get a credit line sanctioned under your name, but not required to have funds to transfer funds through UPI credit line. The amount transferred via UPI shall be from your assigned credit limit only. 

Q. What is the maximum fund transfer limit under the Credit Line on UPI?

Ans. The maximum Credit Line on UPI daily transfer limit shall vary from bank to bank between Rs. 25,000 to Rs. 1 lakh. 

Q. Will the amount be debited from my bank account or not?

Ans. The amount that shall be debited from the sanctioned credit limit and not from your savings account or current account.

Q. How will I make the repayment of the UPI Credit Line?

Ans. You will have to repay the utilised amount to the lending institution that has sanctioned the credit line under your name once the statement is generated. You can also set any autopay option for this servie 

Q. What, if I miss repayment of the credit line?

Ans. In case you miss the repayment of the credit line, it would be reported to the bureau that may eventually hamper your credit score.

Q. Can I reactivate the UPI Credit Line if I have deactivated it once?

Ans. Yes, you can reactivate the UPI Credit Line even if you have deactivated it from your UPI app.

Q. Can I deactivate the UPI Credit Line on one UPI app and add it on the other app?

Ans. Yes, you can deactivate the UPI credit line from your current app and restore it on another app. However, there can be some charges applicable for transferring your credit line from one app to another.