As the festive season approaches, consumers will be looking to optimise their spending power via discounts, offers, and credit facilities. To help consumers manage festive expenses without dipping into their savings or missing out on attractive deals, the National Payments Corporation of India (NPCI) has rolled out a new feature on Unified Payments Interface (UPI) called “Credit Line on UPI”. The service aims to streamline credit-based digital payments by offering a flexible and easy access credit option.
Here’s what you need to know about how to avail UPI Credit Line ahead of your festive purchases.
What is Credit Line on UPI?
The UPI Credit Line is a new feature that allows users to access short-term credit through their UPI-enabled bank accounts. The feature is helpful for those who might need extra liquidity for purchases but would rather prefer the convenience of paying back later. The service allows for borrowing a certain amount which can then be used via UPI for purchases just like a regular account.
Who Can Access This? This product allows individuals and businesses to access pre-sanctioned credit lines from banks.
Traditionally UPI only facilitated payments directly from your bank account via debit card or prepaid valets. However, with this new feature, users can link pre-approved credit lines approved by banks to their UPI apps. The feature facilitates the availability of low-ticket, high-volume retail loans.
How Can You Avail Credit Line on UPI?
Here’s a step-by-step guide for you to apply for Credit Line on UPI:
1. Check Eligibility: The first step to access this service is to check your eligibility. Users can apply via participating banks. The Bank will check your credentials and set the credit limit applicable to you.
2. Link Credit Line: When your bank approves this service for you, the credit line is linked to your UPI account. It will appear as a payment option alongside your bank accounts or wallets within the app.
What Do You Get? UPI users can get a 45-day rolling credit line. This is similar to a credit card or another type of credit line. The process for a Credit Line on UPI would give you quick access to credit when needed.
Do’s You Should Keep In Mind
Set UPI PIN for Credit Line: Add an extra layer of security! Users should set a dedicated PIN exclusively for the credit line on UPI which is different from the PIN used in usual UPI transactions.
UPI AutoPay: You can also set up auto-pay on the UPI facility to make timely repayments of the credit used through this service.
What Would Be The Interest Rate? Users should know that interest rates and offers available on the UPI credit line will be determined by the participating banks individually considering their respective parameters.
For example, a bank may offer this service to select customers based on their credit history with a relatively smaller credit limit. They could charge you a one-time fixed fee of Rs 590 including tax for enrollment and late payment charges if you fail to make payments within the interest-free period of 45 days along with their listed spending slab-based fixed fee.
It is important for you to check in with your bank to sort out interest rate details and avoid deferring on repayment.
With the festive season known for big-ticket purchases such as electronics, home decor, and gifts, the UPI Credit Line can be a valuable tool to stretch your budget without putting immediate pressure on your savings. But you should be mindful to not overspend on things that you don’t need.
