NBFCs to be linked directly to UPI apps like PhonePe, Paytm, and Google Pay (AI Generated Image)
Starting next month, you’ll be able to use UPI not just for basic payments, but also to access loans against fixed deposits, gold, shares, property, and more. In a major upgrade to India’s digital payments ecosystem, the NPCI (National Payments Corporation of India) has issued new guidelines allowing credit lines from banks and NBFCs to be linked directly to UPI apps like PhonePe, Paytm, and Google Pay, said a ET report.
What’s New? Until now, UPI-based loans were limited to pre-approved credit lines and RuPay credit cards. But from August 31, 2025, users will be allowed to link credit lines backed by:
Gold
Property
Shares & Bonds
Business or Personal Loans
Kisan Credit Card (KCC) loans
And other approved categories
How Will It Work? Once linked, you can:
Withdraw cash (limit: ₹10,000/day)
Send money to individuals (P2P)
Make purchases at small shops (P2PM, up to ₹50,000/month)
Continue merchant payments (P2M)
However, all this will still depend on whether your bank approves the UPI linkage of your credit line. Banks will assess each transaction based on the original loan purpose and internal rules.
Why It Matters This change could:
Enable instant access to sanctioned loan amounts via UPI
Simplify payments from business or secured loan accounts
Reduce dependence on manual bank transfers for loan-linked spending
For instance, if you’ve taken a business loan secured against gold, you could soon use UPI to pay your supplier directly—without logging into net banking.
But There’s a Catch Each transaction must match the original purpose of the loan.
Banks may decline UPI payments if they don’t align with loan conditions.
Daily UPI caps still apply: ₹1 lakh for transfers, 20 transactions max/day.
Banks may apply their own limits and decide which merchant categories are allowed.
Expert Take Rohit Mahajan of plutosONE notes, “This will turn UPI into a universal payment tool—not just for spending your money, but also your credit. But final control remains with the bank.”
Prabhu Rangarajan of M2P Fintech adds, “Banks will enable only purpose-linked spending. Credit lines for medical expenses won’t be allowed for buying gold or gambling.”