RIP Plastic: How UPI QR Codes Became India's Credit Card

While BharatPe was building a retail product on top of Credit Line on UPI, the Department of Financial Services used the same stage to extend the underlying framework itself to two of India's largest priority-sector lending schemes: the Kisan Credit Card (KCC) and PM MUDRA Yojana (PMMY).

DFS Secretary Sanjay Lohiya announced that KCC and MUDRA borrowers can now use their already-sanctioned credit limits to make merchant payments directly through UPI — turning a loan that used to require a bank visit or a separate withdrawal into something usable at the same QR code a shopkeeper already has taped to the counter. Kanal

The scale here dwarfs any single fintech's product: there are more than 7.7 crore operative KCC accounts with sanctioned limits exceeding ₹10 lakh crore, and PM MUDRA Yojana has crossed 57 crore loans with cumulative lending above ₹40 lakh crore. Ten banks have enabled the KCC integration so far, and eight have enabled it for MUDRA, with more expected to join in the coming months. Inc42

Importantly, this isn't a new loan created every time someone pays with it. The credit was already sanctioned by the bank; UPI is simply the digital channel through which the borrower now draws against a limit that used to sit unused between formal disbursements. For a farmer or a small trader, that's the difference between credit that exists on paper and credit they can actually spend at the point of sale. BusinessStandard

Both moves are extensions of the same underlying plumbing: RBI's directive dated September 4, 2023, which allowed pre-sanctioned bank credit lines to be used as a funding account for UPI payments — alongside the existing options of savings accounts, overdraft accounts, prepaid wallets, and RuPay credit cards. What changed at this year's Global Fintech Fest wasn't the technology — it was who gets to plug into it. A consumer fintech extended it to everyday retail shoppers. The government extended it to tens of crores of already-existing farm and small-business borrowers who'd never used it before. Khaitan 

The framework only works if banks actually plug into it — right now just 10 banks support the KCC integration and 8 support MUDRA, out of a much larger pool of lenders. Whether that number grows quickly will decide if this stays a flagship-announcement story or becomes genuine everyday infrastructure. The other open question is interest and fee transparency: as more credit gets bundled invisibly into a UPI scan, making sure users can tell an account-funded payment from a credit-funded one — and what it'll cost them — becomes the thing regulators will need to watch closely.

For now, the plastic card isn't gone. But for a fast-growing share of small, everyday purchases, it's already optional.

A consumer credit product built on NPCI's Credit Line on UPI infrastructure, giving eligible users a pre-sanctioned monthly limit of up to ₹60,000 usable for online and offline UPI merchant payments, with a 45-day full-settlement window or 3–12 month EMI options.

There's no physical card and no separate app — the credit line sits behind the same UPI QR scan a user already makes, rather than requiring a card swipe or a separate checkout flow.

The Department of Financial Services extended Credit Line on UPI to Kisan Credit Card and PM MUDRA Yojana borrowers, letting them spend their already-sanctioned bank credit limits directly through UPI merchant payments — covering over 7.7 crore KCC accounts and 57 crore MUDRA loans.

No — the credit was already sanctioned by their bank. UPI is simply a new digital channel to draw against an existing, approved limit, rather than a fresh loan issued per transaction.