RBI Issues Prudential Norms for UPI-Linked Credit Facilities

CIRCULAR NO. DOR.STR.REC.128/21-07-001/2026-27, Dated 23-06-2026

The Reserve Bank of India (RBI) has amended the RBI (Commercial Banks – Credit Facilities) Directions, 2025, to introduce a prudential framework governing credit facilities linked to specific payment instruments.

The amendment clarifies the regulatory treatment of such facilities, including pre-sanctioned credit lines for UPI transactions, and requires banks to incorporate appropriate provisions in their credit policies.

1. Prudential Framework Introduced for Payment-Linked Credit Facilities

The amendment introduces a regulatory framework for credit facilities linked to specific payment instruments.

The framework aims to ensure uniform prudential treatment of such facilities while strengthening risk management and regulatory consistency across commercial banks.

2. Treatment Based on the Underlying Credit Facility

RBI has clarified that the prudential treatment of credit facilities linked to payment instruments shall be determined based on the nature of the underlying credit facility.

Accordingly, the applicable prudential norms governing the underlying loan or credit exposure will continue to apply to such facilities.

3. Coverage of Pre-Sanctioned UPI Credit Lines

The clarification specifically includes pre-sanctioned credit lines for UPI transactions.

Such facilities will be governed by the prudential framework applicable to the underlying credit facility and will not be treated as a separate category of lending.

4. Banks Required to Update Credit Policies

The amendment requires commercial banks to incorporate the terms and conditions governing payment-linked credit facilities into their credit policies.

This is intended to ensure appropriate governance, risk assessment, and operational controls for such products.

5. Objective of the Amendment

The amendment seeks to:

• Introduce a prudential framework for payment-linked credit facilities;
• Clarify the regulatory treatment of pre-sanctioned UPI credit lines;
• Promote consistency in the application of prudential norms;
• Strengthen credit risk management by commercial banks; and
• Ensure appropriate governance through updated credit policies.

6. Expected Impact

The revised framework provides greater regulatory clarity for banks offering payment-linked credit products. It is expected to facilitate innovation in digital lending while ensuring that such products remain subject to the prudential norms applicable to the underlying credit facility.

7. Key Takeaway

RBI has amended the RBI (Commercial Banks – Credit Facilities) Directions, 2025, to introduce a prudential framework for credit facilities linked to payment instruments. The amendment clarifies that the prudential treatment of such facilities, including pre-sanctioned credit lines for UPI transactions, shall be determined by the nature of the underlying credit facility and requires banks to incorporate the relevant terms and conditions into their credit policies.

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