Synopsis: NPCI has issued new guidelines for using pre-sanctioned credit lines via UPI. All stakeholders, including banks and app providers, must implement the changes by August 31, 2025.
The National Payments Corporation of India (NPCI), which operates the Unified Payments Interface (UPI), has released a new circular on July 10, 2025, detailing updated guidelines regarding the usage of pre-sanctioned credit lines through UPI. These guidelines aim to streamline customer experience and enhance regulatory compliance.
This change follows a circular issued in September 2023 that enabled the use of pre-sanctioned credit lines for UPI transactions. Previously, UPI transactions were restricted to savings accounts, overdraft accounts, RuPay credit cards, and wallets. With this inclusion, credit lines now serve as an additional funding option for UPI payments.
Key Highlights of the New NPCI Guidelines:
1.Defined Usage Compliance: Issuers must ensure the credit lines are used only for the purpose they were originally sanctioned for and in alignment with existing regulatory frameworks.
2.Approval Authority: Credit issuers can approve or reject UPI transactions based on regulatory norms and intended use of the loan.
3. Updated MCCs: All UPI-linked banks, sub-members, PSPs, and third-party apps must enable additional Merchant Category Codes (MCCs) to support interest-bearing accounts.
The NPCI has directed all concerned entities—banks, app providers, credit issuers—to implement the changes by August 31, 2025.
This move is expected to improve transparency, accountability, and security in the digital credit ecosystem linked via UPI.
Disclaimer: This article is for informational purposes only. It does not constitute financial advice. Readers are advised to consult their banks or official NPCI resources for precise details.
