The Future of Digital Lending is Here! Pre-Sanctioned Credit Lines by Banks will Now be Facilitated through UPI

The era of digital payments is now advancing on a rapid scale. With UPI transactions, spreading out convenience and feasibility

Credit Lines

The era of digital payments is now advancing on a rapid scale. With UPI transactions, spreading out convenience and feasibility to consumers for making faster payments at both online and offline stores, there’s a new banking feature that’s about to blend in with the UPI. 

And this time, it is not about any interchange fee but the operational feasibility of the pre-approved credit lines through UPI. It means banks can now lend pre-approved credits to their consumers without the need for sanctioning any physical credit card for it. 

Let’s get a deeper insight into what this new update by RBI has for both banks and consumers. 

The Announcement by RBI

RBI has now opened up the window for enabling operations associated with the pre-sanctioned credit lines of banks via UPI. RBI Governor, Shaktikanta Das, said this in an announcement on April 6. 2023, during the bi-monthly monetary policy committee meeting.

He said that the potential of UPI will see an expansion with this idea of enabling operations of banks’ pre-sanctioned credit lines with UPI. Thus, it will encourage further innovations in the digital payment landscape of India, he added. 

As of today, UPI transactions support feasible fund transfers between deposit accounts at various banks. At times, the PPIs (Prepaid Payment Instruments) are used, such as digital wallets, for select UPI transactions. But, with this idea of expansion, UPI will now support the transfer of funds to/from the bank’s digital credit lines. 

What are Credit Lines?

If you are new to these banking terms, then you must know that credit lines are simply a form of pre-approved loan amount or credit, which is sanctioned or approved for a consumer based on several data analyses. The credit lines are also offered to non-bank customers by evaluating their credit bureau scores and other details. 

How will the Accessibility of Pre-Approved Credit Lines via UPI Promote Digital Lending?

With this new feature of UPI, it will be feasible for banks to offer pre-sanctioned credit lines to their consumers without any strenuous or time-consuming procedure.

Such an initiative will change how consumers accessed credit lines in the past. Seamlessness and enhanced consumer experience through UPI will be further evolved. As a result, the digital banking industry will be more adaptable and eventually thrive. 

With UPI being integrated with banks for processing loan amounts and giving accessibility of those funds to consumers, the effort & time involved will be dramatically less. Consumers will find it more convenient to secure their loans and help the nation lead toward fruitful economic development and growth. 

To help explain this better, Shivaji Thapliyal, Lead Analyst and Head of Research YES Securities, stated that banks will now have the feasibility of offering their credit products to consumers without the need to provide them with physical credit instruments. Apart from that, there won’t be any need for the POS machines as well, for using the digital credit lines that the banks offer, he added. 

Banks can now promote and offer their credit card-like facilities to any consumer who has a UPI ID linked with the bank. And the same goes for any UPI merchant, even with low-cost QR codes. 

Harish Prasad, Head of Banking, FIS, said that the use of UPI for enabling pre-sanctioned credit lines will boost the Buy-Now-Pay-Later (BNPL) and digital lending market in the country. Furthermore, the usability of credit lines from banks will be increased among a wider merchant base. Thus, transformational growth is about to hit the nation in the BNPL and digital lending sector, he added. 

In terms of benefits for the consumers, this move will help reduce the number of physical credit cards they have to carry to avail of the credits. They can just make simple UPI transactions to avail the amount, just like usual bank UPI transactions. 


This is how the UPI sector is changing its adaptation around the world. With RBI now making it feasible for consumers and banks to accept and offer credit lines, the utilisation rate will stupendously increase. Apart from that, the banks will also be saving money on preparing and dispatching physical cards. 

There is ample room for innovation in the digital payment landscape of India. And, with these smart integrations, the opportunities will keep growing in the forthcoming future! 

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