UPI Users Alert! Now You Can Withdraw Loan Amount, Send Money & Pay Shopkeepers Easily | Image:
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India’s widely-used payment tool – UPI – is getting a powerful upgrade. Starting August 31, 2025, you’ll be able to use pre-approved loans and credit lines directly through your UPI apps like PhonePe, Google Pay, Paytm, and others. This means you can send money, shop at local stores, or even withdraw cash – all from your linked loan or overdraft.
Until now, UPI credit features were mostly limited to paying shopkeepers. But this change opens up a whole new way to access and spend credit instantly. Let’s break it down in simple terms.
Think of it like this: earlier, you could only use your own money on UPI. Now, with these new rules from NPCI (National Payments Corporation of India), you can also use pre-approved loan money, but with some conditions.
Got a loan against your Fixed Deposit (FD)? You can now scan and pay a medical bill using UPI directly from that loan. Running a small business and using a business overdraft? You can now pay suppliers or employees via UPI from your credit line. Have a personal loan approved for education? You can use UPI to pay tuition fees directly. The catch: you must spend the credit for the purpose it was approved for.
Imagine you’re a shopkeeper in Jaipur with a loan approved against your gold jewellery. Earlier, you had to go to the bank or use limited options to access that credit. But starting August 31, you can pay your wholesale vendor via UPI using that very loan from your phone.
Or say, Rina, a college student in Bengaluru, has a pre-approved education loan. Now, she can pay her coaching centre fees using PhonePe linked to that loan account, no bank visit needed.
What Kind of Credit Can Be Linked?
Earlier, only RuPay credit cards and overdraft accounts could be used with UPI. But from August 31, the list expands to include: Loans against Fixed Deposits (FDs), Credit against Bonds or Shares, Property-backed credit, Gold loans, Personal loans, Business loans, Unsecured loans and Kisan Credit Card (KCC) loans, and a future-ready slot for upcoming loan types. This gives both individuals and small business owners more flexibility and access to credit with just a tap.
Rules and Limits
• You can’t spend freely from a loan. The purpose matters.
• Banks will approve or reject payments based on how your loan was defined.
• Different banks may have different rules, so check before linking your credit line.
What Are the Daily Limits?
Just like regular UPI, there are caps:
Max Rs 1 lakh/day for P2P (Person to Person) and P2M (Person to Merchant)Cash withdrawal limit: Rs 10,000/day Max 20 transfers/day for person-to-person
Remember, your bank might set stricter rules than NPCI, so it’s best to check with them before making big payments.
Why This Matters
This move could be a game-changer for people without easy access to credit cards, especially in small towns, rural areas, and among small business owners. You don’t need a fancy credit card – just a pre-approved loan, and your UPI app.
It also makes it easier to manage your loans, since you can track and spend from them using tools you already use daily – like PhonePe or Google Pay.
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