Global Fintech Fest 2026: DFS Secretary Sanjay Lohiya unveils UPI credit for KCC, MUDRA borrowers

Kisan Credit Card (KCC) and PM MUDRA Yojana borrowers can now use their sanctioned credit limits to make merchant payments through UPI, in a move that could put formal credit directly into the hands of farmers and small businesses at the point of purchase.

The facility, unveiled by Department of Financial Services (DFS) Secretary Sanjay Lohiya at Global Fintech Fest 2026 on Wednesday, extends the Reserve Bank of India’s ‘Credit Line on UPI’ framework to the two government-backed credit schemes.

Also read: GFF 2026: RBI flags speed, concentration, opacity as key risks as AI use grows in finance


The move potentially brings UPI-based digital payments to a large pool of formal borrowers. There are more than 7.7 crore operative KCC accounts with sanctioned limits exceeding ₹10 lakh crore, while PM MUDRA Yojana has crossed 57 crore loans amounting to more than ₹40 lakh crore, according to the DFS.

Under the facility, eligible KCC and MUDRA beneficiaries can link their sanctioned bank credit as a funding account on UPI and use it for merchant payments. The framework was enabled by the RBI in September 2023.

For KCC customers, the facility is currently available 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. More banks are expected to join in the coming months.

The development is particularly significant for farmers and small businesses that use KCC and MUDRA credit for working capital and other business needs, as it allows sanctioned credit to be used through an everyday digital payments channel rather than requiring a separate cash-based transaction.

ATMs to become card-issuance, banking access points

Lohiya also launched an open-source Android-based ATM that can instantly issue personalised RuPay debit, credit and NCMC cards and generate merchant QR codes for UPI collections.

The machines are designed to offer services beyond cash withdrawals and deposits, including cheque deposits, account opening and loan applications. Customers can receive cards directly from the ATM, potentially eliminating a branch visit and waiting for physical card delivery.

Nine banks, including State Bank of India, Bank of Baroda, Union Bank of India, Punjab National Bank, Bank of India, Central Bank of India, UCO Bank, Slice Small Finance Bank and Airtel Payments Bank, are currently engaging with NPCI and ATM manufacturers to assess the solution.

Banks are also exploring the deployment of these machines as Digital Banking Units in semi-urban and rural areas, as well as at transit hubs, airports, educational campuses and corporate parks.

Also read: PM Modi hails India's fintech story at Global Fintech Fest 2026 in Mumbai, calls UPI the big champion of India's rise

Aadhaar-based cash deposits extended beyond branches

The DFS also introduced AePS Three-Party Cash Deposit, allowing a depositor registered through Aadhaar biometric authentication to deposit cash into the bank account of a family member or another beneficiary through participating AePS Touchpoint Operators.

The service is intended to extend cash-deposit access beyond a customer's own bank branch or cash deposit machine, particularly in rural, semi-urban and underserved areas.

Before a transaction is completed, the depositor receives confirmation of the beneficiary’s name via SMS, while Aadhaar-based biometric authentication verifies the depositor and beneficiary validation adds another layer of confirmation.