Department of Financial Services (DFS) Secretary Sanjay Lohiya unveiled a new facility at Global Fintech Fest 2026 that allows eligible Kisan Credit Card (KCC) and PM MUDRA Yojana borrowers to use their sanctioned credit limits for merchant payments through UPI. According to reports from The Economic Times, this move extends the Reserve Bank of India's 'Credit Line on UPI' framework to the two government-backed credit schemes, potentially bringing UPI-based digital payments to a large pool of formal borrowers.
The facility addresses significant credit volumes, with more than 7.7 crore operative KCC accounts having sanctioned limits exceeding ₹10 lakh crore, while PM MUDRA Yojana has crossed 57 crore loans amounting to more than ₹40 lakh crore, as reported by The Economic Times. Under the new framework, eligible KCC and MUDRA beneficiaries can link their sanctioned bank credit as a funding account on UPI and use it for merchant payments, with the facility currently enabled by the RBI since September 2023.
Currently, KCC customers can access the facility through State Bank of India, Bank of Baroda, Punjab National Bank, Union Bank of India, Indian Bank, Canara Bank, Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and UCO Bank. MUDRA beneficiaries of State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, Canara Bank, Indian Overseas Bank and UCO Bank can also access the facility through UPI, as reported by The Economic Times. More banks are expected to join in the coming months.
The development aligns with India's broader strategy to leverage its fintech expertise globally, as outlined by Commerce Secretary Rajesh Agrawal at Global Fintech Fest 2026. Agrawal emphasized that India aims to link its payment systems with trading partners in new agreements, stating that "Every free trade agreement we negotiate, there is also a discussion around how we can align our payment systems and harmonize our payment system to talk to each other." This strategy seeks to make cross-border payments faster and significantly cheaper for users, with UPI currently live in 11 countries and plans to expand to more markets. The facility is particularly significant for farmers and small businesses that use KCC and MUDRA credit, allowing sanctioned credit to be used through an everyday digital payments channel rather than requiring separate cash-based transactions.
