Major lenders like Axis Bank, HDFC Bank, and Kotak Mahindra Bank are now preparing to offer credit payments through UPI after a long wait. These banks were already providing RuPay credit cards that work on UPI for credit-based transactions. But now, they are getting ready to launch a new facility called “UPI Credit Line.”
What is the preparation?
Axis Bank and HDFC Bank are working with fintech startups to launch this new product. Fintech companies like Navi, SuperMoney, and SalarySe will partner with these banks to offer this service. However, HDFC Bank, Axis Bank, and Kotak Mahindra Bank refused to comment on the matter.
Why were banks delaying it?
People aware of the situation said that big banks did not want to launch this feature until they had full clarity on:
- Interest rates
- How the interest would be collected
- How long the interest-free period would be
A private sector banker stated that collecting small loan amounts through such platforms could be very challenging.
Also Read: You Can Set UPI PIN Without a Debit Card – Here’s How
How will banks benefit?
An official from a Delhi-based payment app said that many banks see this as an opportunity to attract new customers by offering small loans. It will help banks reach more people and gain reliable customers who repay their loans on time.
What is UPI Credit Line?
Sometimes you need to make an urgent payment, but your bank account does not have enough balance. With the UPI Credit Line, any UPI user can make payments even without money in their account. It works like a short-term loan, and you must repay it later along with interest.
NPCI launched this product in September 2023. Karnataka Bank and Suryoday Small Finance Bank, in partnership with Navi and Paytm, became the first lenders to offer UPI Credit Line services.