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New Delhi. Now a big change is about to come in India’s digital payment platform UPI i.e. Unified Payments Interface, which can make small loans and household expenses easier. Under the talks between National Payments Corporation of India and banks, there is a preparation to give interest-free period like credit card in the credit line given on UPI. With this, users will not have to pay interest for a fixed period after using the amount immediately, as is the case with credit cards.

New change will solve the problem
Suppose you do not have money in your account right now, but you have to spend ₹2,000-₹5,000 immediately. In UPI credit line, the bank lends you a pre-determined amount, which you can spend through UPI only. The problem till now was that as soon as you spent money from the credit line, interest started accruing from the same day. For this reason people were avoiding adopting it.

Facility of interest-free period will be available
Like a credit card, getting an interest-free period means that the user will be charged interest on the borrowed amount when he makes the payment after the deadline. Such a feature could make UPI credit lines more attractive than traditional credit cards and increase customer adoption rates.

Can become an alternative to credit card
With credit card-like easy terms, interest-free days, and the accessibility associated with digital payments, this UPI credit line could be especially beneficial for those who do not have traditional credit cards, but for mass adoption, banking institutions will need to take regulatory rules and market feedback into account.

status till now
Till now, banks and fintech companies have offered this facility in different models. For example, Yes Bank has launched a credit line with an interest-free period of 45 days, and Suryoday Samal Finance Bank has introduced a service with an interest-free period of 30 days.

Model and purpose of credit line
UPI Credit Line was first introduced by RBI Shaktikanta Das in April 2023 and was formally launched in September 2023 to provide easy access to credit to people and small businesses who do not have access to credit cards. Under this service, users can get a credit limit of up to ₹5,000 through their UPI app, and if they repay the amount within the stipulated time, they will not have to pay a single rupee interest on it.