Credit on UPI rails halts in its current avatar

Fintech startups have been asked to stop offering instant credit lines on UPI transactions and move to an overdraft model instead. These startups now have to rework arrangements with banks and their lending partners, which could bring in stricter verifications of borrowers



Pratik Bhakta

July 22, 2021

7 Min Read

Credit offered on the Unified Payments Interface—credit lines that can be used for UPI transactions—has attracted regulatory ire, according to multiple sources aware of the development. The National Payments Corporation of India, which manages UPI railroads, has asked fintech startups offering this facility to stop running these programs in their current avatar.

“These transactions were being marked as normal person-to-person or person-to-merchant transactions. From now on, these will have to originate as overdraft transactions,” said a banker. “The central bank, too, is unhappy with these current arrangements.”

An overdraft facility allows customers to withdraw or transact a certain amount above the balance kept in their savings accounts, somewhat like a credit line on a savings account. 




As a premium subscriber, you will get access to 3+ premium articles a week
Limited time offer
Launch price
/ Year
INR 3,999
Save 25% with our launch offer.
Please apply the code at checkout.

copyCopy Code

Upgrade Now



As a premium subscriber, you will get access to 3+ premium articles a week

Smart Information, Better Decisions

We report on the latest and most important developments in India’s biggest tech companies and also disruptive startups so you can make better decisions.

Seasoned Team

Tracking the highs and lows of India’s biggest internet companies over the past decade has given us access to the right decision-makers to interpret the latest state of play.

Inside View with Org Charts

Know the key decision-makers with Org Charts. We thrive on decoding boardroom conversations so we can bring you a 360° view of what's happening at India's high-growth companies.

Filtering the Noise

New economy companies cannot always be evaluated using traditional methods. We analyze the relevant metrics, ask the tough questions to get you the right picture

For subscribers only

Premium Reads


View More >>

Deeply reported and objective news on the country´s fastest-growing companies and the people behind them.