By Chinmaya Desai

In the evolving landscape of India’s digital economy, few innovations have made as profound an impact as the Unified Payments Interface (UPI). From facilitating over 16.5 billion transactions monthly to becoming the backbone of real-time payments, UPI has transformed the way India conducts financial transactions. However, its potential to revolutionise credit access is only beginning to unfold. Enter Credit Line on UPI (CL on UPI)— a game-changer that will democratise credit access, mitigate systemic risks, and empower both banks and customers alike.

The journey toward CL on UPI began with a glaring need to address the growing reliance on small, high-interest loans. Millions of consumers have resorted to sachet loans, which were often provided by the unorganised sector at exorbitantly high interest rates which led to tragic outcomes for a few. Credit line on UPI can put an end to these predatory lending practices by bringing them under the more controlled umbrella of traditional banking. 

CL on UPI is a more structured, transparent, and sustainable credit ecosystem that leverages UPI to enable banks to offer flexible, low-interest, real-time credit directly to consumers. 

Financial inclusion and the funnel of opportunity

One of the most exciting possibilities of CL on UPI is its potential to include millions of underserved individuals in the formal credit system. The introduction of Credit Lines on UPI allows banks to tap into a previously untapped segment of the population—those who may not meet the stringent requirements for traditional credit cards, yet are creditworthy. A small, flexible credit line via UPI can be a game-changer for these individuals. This system addresses a gap in the market, where people with limited credit history but steady incomes can now access credit with far fewer barriers to entry.

For banks, this represents a massive growth opportunity. Rather than focusing on the narrow funnel of individuals who qualify for traditional credit cards, banks now can capture an entirely new segment of customers—those who were previously excluded due to limited credit scores or lack of collateral. As a result, the scope for customer acquisition becomes broader, and financial inclusion becomes an attainable goal.

UPI as a bridge to the future of credit

In a country where the majority of the population remains underbanked, the ability to access financial products via UPI represents the future of credit. CL on UPI eliminates many of the barriers traditionally associated with borrowing—such as extensive paperwork, high entry barriers, and slow disbursements. Instead, consumers can access small credit lines instantly, with minimal friction. The ease of use, coupled with banks’ ability to monitor transaction data in real-time, means that credit products can be personalized to individual needs and repaid on flexible terms.

For instance, small business owners can access short-term loans to manage their cash flow, while consumers can use their credit line for personal or emergency expenses, all without the lengthy approval processes typically associated with traditional loans.

Additionally, UPI-based credit lines provide transparency in both usage and repayment, making it easier for both lenders and borrowers to track the progress of loans. This fosters a healthier credit ecosystem where consumers can build and maintain a positive credit history, while banks can more accurately assess risk and make informed lending decisions.

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The Future of Credit: Flexible, Personal, and Always On  

The future of credit is adaptive, flexible, and deeply personal. Consumers are moving beyond traditional credit structures, demanding greater control over how they borrow and repay. Meeting these evolving needs requires modern infrastructure capable of delivering scalable solutions like short-term credit, zero-interest options, and automated installment plans. Features such as automated installment conversions and flexible repayment schedules give consumers the control they seek. These innovations demonstrate how the right technology stack can transform credit offerings, helping banks stay relevant in an evolving financial landscape.  

Enabling Agility: Modern Infrastructure for Banks  

In today’s competitive environment, speed and scalability are critical for banks seeking to innovate. Launching Credit Line on UPI products in weeks instead of months requires platforms which offer secure, compliant, and customisable solutions. This modern infrastructure allows banks to introduce revolving credit lines and sachet-sized loans tailored to consumer preferences.  

With features such as UPI autopay and flexible EMIs, banks can meet diverse needs while maintaining compliance. By adopting agile platforms, banks can confidently deliver dynamic credit solutions, positioning themselves as leaders in a rapidly changing market.

Conclusion: The future is now

The introduction of Credit Line on UPI by the NPCI is an exciting leap forward in the evolution of India’s credit landscape. By combining the reach and convenience of UPI with innovative credit offerings, banks can provide real-time, low-interest, and highly personalized credit products to millions of Indians—empowering both individuals and businesses. The technology is already here, and it’s poised to redefine the future of credit in India.

For banks, this represents a unique opportunity to build stronger, more inclusive customer relationships. For consumers, it opens the doors to financial products that were previously out of reach.

(The author is Co-founder and Chief Business Officer at Falcon. Views are the author’s own and not necessarily those of financialexpress.com.)