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Another big change has come in the field of digital payments in India. The National Payments Corporation of India (NPCI) has issued a circular on July 10, 2025 regarding pre-sanction credit lines on UPI. If you are a regular user of UPI or use a credit line provided by a bank, then these new rules can have a significant impact on your transactions.
What is the new circular?
Under the new guidelines, now banks and payment service providers (PSPs) will have to implement all the necessary changes by 31 August 2025. Its main objective is to make the credit based UPI payment process more transparent, secure and purpose-oriented for consumers.
Key points of the new rules
Purpose of credit line: Now the use of credit line through UPI will be possible only for the purpose for which the loan was sanctioned. That is, if the loan is taken for education, business, or any special work, then you will be able to use it for the same.
Bank's responsibility: The bank will now check whether every transaction is in line with regulatory guidelines and loan purpose before approving or rejecting it. Transactions can be blocked if rules are violated.
Unified Customer Experience: All banks, PSPs and third party apps will have to make the user experience uniform and flawless as per the rules.
Merchant Category Code (MCC): It has now been made mandatory to enable additional MCCs for different types of payments related to the credit line so that merchants do not face any challenge in payments.
What does this mean for the consumer?
- These rules will have a direct impact on common consumers:
- Misuse of credit approved for different needs will no longer be possible.
- Increased monitoring and verification by banks will reduce the possibility of digital fraud.
- The new technical process will make transactions more simple and trackable for customers.
- A new era of transparency and security in digital payments
Credit facility through UPI was already providing instant loans to crores of customers and merchants. Now due to these new guidelines, customers will get more clean and purpose-transparent service, which will increase trust in the fintech sector.