Use UPI To Instantly Access Loans Against Gold, Property, FDs, & More—Here's What NPCI Circular Said

In a move that could make borrowing money easier and more digital-friendly, the National Payments Corporation of India (NPCI) has issued new rules that let users make Unified Payments Interface (UPI) payments using pre-approved loans—also known as credit lines.

This means that if your bank has already sanctioned a loan for you, you could soon use that money directly through UPI to pay for goods and services, send money to others, or scan QR codes at stores. But there’s a catch: every transaction will now be checked by your bank to ensure the money is used only for the purpose it was approved for.

The new rules, outlined in a circular dated July 10, 2025, build on earlier guidelines issued in September 2023. Banks are now required to approve or reject each UPI payment made from a credit line based on the reason the loan was given. For example, if the loan was meant for business use, it cannot be used for personal shopping.

Also Read: UPI Users Alert! Now You Can Withdraw Loan Amount, Send Money & Pay Shopkeepers Easily | Republic World

Banks will also need to define how these loans can be used and ensure all rules align with RBI regulations and banking laws.

To make this work, NPCI has asked all UPI players—including banks, app providers like Google Pay and PhonePe, and other payment platforms—to allow a wider range of merchant categories. This includes payments for credit backed by assets like gold, property, shares, or fixed deposits, as well as regular personal or business loans that don’t require collateral.

In simple terms, if you're using a credit line through UPI, your bank will keep a close eye on how you spend that money. Only payments that match the loan’s approved purpose will be allowed.

These new rules must be followed by all stakeholders by August 31, 2025.

NPCI hopes this step will make borrowing through UPI safer and more purposeful—helping people access digital credit while preventing misuse.