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Credit Line on UPI (Clou): NPCI’s Pre-Approved Credit

9 October 20251 min read
BANKING & FINANCECredit Line on UPI(Clou): NPCI’sPre-ApprovedCredit9 October 2025safalsetu.com

Why in the news

Almost two years on, Clou has seen modest uptake. Analysts point to unclear rules, uneven technology and poor awareness.

Key facts

  • Offers pre-approved credit within the UPI interface for underserved and new-to-credit users, using digital payment footprints for assessment.
  • NBER research (Shashwat Alok et al.): during 2015-2019, subprime and new-to-credit fintech loans rose tenfold; UPI footprints did not raise defaults.
  • Enablers: cheap internet and Jan Dhan Yojana accounts.
ChallengeSuggested fix
Unclear loan classification (personal vs credit card)Unified RBI-NPCI guidelines
Small lenders lack real-time UPI linksShared cloud or fintech tie-ups
Low awarenessStandard data-sharing and consent framework; open, affordable platforms

Exam angle

  • Clou = Credit Line on UPI; launched 2023.

Test yourself

1. In which year did NPCI launch Credit Line on UPI (Clou)?

The notes state Clou was launched in 2023.

2. According to the NBER research cited for UPI and credit, a 1% rise in UPI transactions was linked with what rise in credit?

The study linked a 1% UPI rise to a 0.73% credit rise.

3. Which is a challenge faced by Credit Line on UPI (Clou)?

Unclear classification as personal or credit card loans is a key concern.

This topic is part of Daily Current Affairs 9 October 2025 (15 topics).

All topics of the dayDay quizOctober 2025

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