Want to UPI now and pay later? Find out how you can do UPI with insufficient bank balance

financialexpress.com:

You can now make payments through UPI even if your account lacks sufficient money.The Reserve Bank of India (RBI) has recently given the green light to banks to offer a credit line facility to UPI users, allowing users to spend from a pre-sanctioned credit line and settle the dues later.

The RBI has paved the way for transfers from pre-sanctioned credit lines at banks via the UPI network. According to a notification from the RBI on September 4, 2023, “Under this facility, payments through a pre-sanctioned credit line issued by a scheduled commercial bank to individuals, with the prior consent of the individual customer, are enabled for transactions using the UPI system.” This development empowers you to link these credit lines issued by banks to your UPI account, facilitating seamless payments.

Until now, UPI users could only link their savings accounts, overdraft accounts, prepaid wallets, and credit cards to the UPI system. However, this recent innovation allows you to harness your pre-approved credit line to conduct UPI transactions.

A pre-approved credit line essentially functions as an overdraft facility provided by banks. You can utilize this facility through UPI applications like Google Pay, Paytm, MobiKwik, and various mobile banking UPI applications as per individual bank policies. Initially, the bank seeks your consent to establish a credit line with a predefined limit. Once approved, you can spend the sanctioned amount via your UPI app and settle your dues by the due date. While some banks levy interest on the amount utilized from the credit line, others offer a credit-free period, meaning no interest accumulates if you repay within a specified timeframe. This latter option bears a resemblance to the “buy now