HDFC, ICICI Bank Starts Offering Credit On UPI: Make UPI Payments Today, Pay Later!


Radhika Kajarekar

Radhika Kajarekar

Sep 16, 2023


You can now use your UPI for payments even if your bank account lacks sufficient funds, thanks to the Reserve Bank of India’s recent move allowing transfers from pre-sanctioned credit lines via the UPI network.

HDFC, ICICI Bank Starts Offering Credit On UPI: Make UPI Payments Today, Pay Later!

Previously, UPI users could only link their savings accounts, overdraft accounts, prepaid wallets, and credit cards to the UPI system. However, the RBI has expanded this capability to allow the utilization of pre-approved credit lines for conducting UPI transactions.

Banks Can Offer Credit Line Facility

As of September 4, 2023, as per the RBI notification, banks can offer a credit line facility to UPI users, enabling them to spend from a pre-sanctioned credit line and settle their dues later. This development empowers individuals to link these credit lines issued by banks to their UPI accounts, facilitating seamless payments.

Pre-sanctioned credit lines involve pre-approved credit granted by banks based on data analytics, assessing the creditworthiness of both existing deposit customers and potentially non-customers.

Some banks refer to this feature as “UPI Now, Pay Later.” 

UPI Now, Pay Later

Notably, HDFC Bank and ICICI Bank have already introduced credit lines, namely HDFC UPI Now Pay Later and ICICI PayLater, respectively. These credit lines function as overdraft facilities that account holders can utilize through all UPI-based apps, including Google Pay and MobiKwik.

Both banks have set a maximum credit line of Rs 50,000, depending on the eligibility of the account holders.

HDFC Pay Later Feature

When you activate PayLater on your UPI app, a new account is created with a designated credit line that can be used for UPI transactions. However, it’s important to note that you can only make payments to merchants using this overdraft account under PayLater on UPI, and fund transfers to individuals are restricted. Interest is charged only on the credit limit used and for the number of days it is used, not on the entire amount.

The interest rate is calculated based on the borrowed amount and the number of days it is used. For example, if you use your PayLater account balance of Rs 5,000 for 10 days, you’ll be charged interest on Rs 5,000 for 10 days only. This interest is debited from the PayLater account at the end of the month. If the interest is not paid within three days (grace period), the bank will deduct it from your primary account (Savings/Current). A fee of Rs 199 + GST is charged for the new application.


ICICI Pay Later Feature

In the case of ICICI Bank’s PayLater facility, account holders receive up to 45 days of zero-interest digital credit, which can be used for bill payments, online shopping, and payments to any merchant with a UPI ID. PayLater dues are automatically debited from your ICICI Bank Savings Account. The bank charges a one-time activation fee of Rs 500 plus GST and a service charge of Rs 75 + applicable taxes for every Rs 3,000 of monthly spending from your ICICI Bank PayLater account (applicable on monthly spends of Rs 3,000 & above). Additionally, penal interest based on the daily total outstanding post the ‘Pay by Date’ and fixed late payment charges are levied in subsequently generated bills until dues are cleared.

It’s important to note that PayLater cannot be used for making credit card payments, transferring funds to other bank accounts, or conducting person-to-person fund transfers.


Radhika Kajarekar
Radhika Kajarekar
  • 793 Posts

Subscribe Now!

Get latest news and views related to startups, tech and business

You Might Also Like

Business
Dec. 8, 2022

Beat The Burden Of Medical Inflation With A Health Insurance

As disease rates rise and medical technology develops, treatment costs climb. It’s essential to understand that medical costs are not exclusively associated with hospitals. The cost of prescription drugs, diagnostic procedures, ambulance and operating room fees, consultations with doctors, and other costs are also constantly increasing. All of them could put a big strain on […]

Business
Dec. 8, 2022

3 Biggest Changes Of iOS 16.2 Update That Every iPhone User Should Know!

In its latest update Apple said that it is preparing for the iOS 16.2 update for iPhones across the world. Notably, like the previous release, there are a couple of changes coming for the iPhones.  iOS 16.2 Update Release Date So far, Apple has not announced a release date for iOS 16.2 update. Reportedly, the […]

Business
Dec. 8, 2022

300 Microsoft Employees Create Employee Union, First Time Ever: This Is How Microsoft Reacted

Around 300 workers at Microsoft Corp.’s ZeniMax Studios have commenced the process of forming a union which is said to be the first at the software giant in the US.  Here, Microsoft Corp.’s ZeniMax Studios known for popular video games including Skyrim and Fallout. Forming Union In Microsoft Corp Moreover, the quality assurance employees at […]

Business
Dec. 7, 2022

India Beats China In Air Travel Safety: Ranking Jumps From 102 To 48 In Global Aviation Safety

India’s air safety protocols and executions have improved drastically over the years, as validated by the findings of a specialized agency of the United Nations, the International Civil Aviation Organization or ICAO. The UN watchdog has upgraded India’s ranking in terms of aviation safety to the 48th position, jumping past the rankings of countries like […]

Recent Posts

Related Videos

   

Subscribe Now!

Get latest news and views related to startups, tech and business

who's online