UPI limits 2024

RBI Boosts UPI Limits and Keeps Key Interest Rate Steady at 6.5%

In a move that highlights the ongoing commitment to digital payment innovation and financial inclusion, the Reserve Bank of India (RBI) has once again maintained its key interest rate at 6.5%, marking the tenth consecutive hold. The announcement was made by RBI Governor Shaktikanta Das, underscoring the central bank’s cautious approach to monetary policy amidst evolving global economic conditions.

Alongside the interest rate decision, the RBI has also rolled out significant changes to its UPI (Unified Payments Interface) ecosystem, enhancing transaction limits for UPI 123Pay and UPI Lite, aiming to make digital payments even more accessible across diverse user groups in India.

UPI 123Pay and UPI Lite: Major Transaction Limit Increases

As part of its efforts to boost digital payments, the RBI has increased the per-transaction limit for UPI 123Pay from ₹5,000 to ₹10,000. This enhancement allows feature phone users to conduct larger transactions without the need for a smartphone or internet connection. Additionally, the UPI Lite wallet limit has been raised from ₹2,000 to ₹5,000, with a per-transaction cap now increased to ₹1,000, up from ₹500. These changes are designed to cater to both high-value and low-value transactions, broadening the scope of UPI usage across India.

RBI’s Vision: Pioneering Digital Payment Solutions

“UPI has dramatically transformed India’s financial landscape by making digital payments more accessible and inclusive through constant innovation. To continue driving UPI adoption, we’ve made two key enhancements: (i) raising the per-transaction limit for UPI 123Pay from ₹5,000 to ₹10,000, and (ii) increasing the UPI Lite wallet limit from ₹2,000 to ₹5,000, with the per-transaction limit going from ₹500 to ₹1,000,” said Governor Shaktikanta Das during the RBI’s latest monetary policy review.

These updates reflect the central bank’s dedication to fostering a cashless economy, ensuring that the UPI system remains a cornerstone of India’s digital financial ecosystem.

Industry Reaction: A Step Forward for Financial Inclusion

Industry leaders have welcomed the increase in UPI limits, viewing it as a game-changer for financial inclusion. Siddharth Maurya, Founder and Managing Director of Vibhavangal Anukulakara Private Limited, praised the move, emphasizing that the expanded limits will better serve the diverse needs of India’s user base.

Similarly, Raghunandan Saraf, Founder and CEO of Saraf Furniture, pointed out that these enhanced limits will enable feature phone users to handle larger transactions seamlessly. With UPI 123Pay leveraging four distinct technologies, feature phone users now have unprecedented access to high-value digital transactions, making UPI even more versatile.

UPI Lite: Revolutionizing Small Payments

The enhanced UPI Lite wallet, with its new ₹5,000 limit and ₹1,000 per-transaction cap, is expected to further streamline low-value, offline digital payments. This development simplifies everyday transactions and reduces the need for cash, particularly in rural and semi-urban areas where internet connectivity may be inconsistent.

“UPI 123Pay caters to India’s 400 million feature phone users, allowing them to make digital payments without needing a smartphone or internet connection. Users can set up UPI 123Pay by dialing *99#, selecting their bank, entering debit card details, and creating a UPI PIN, ensuring secure transactions even without internet access,” explained Mehul Mistry, Global Head of Strategy at Digital Financial Services & Partnerships.

For UPI Lite, Mistry noted that the wallet stores money directly on the user’s device, eliminating the need to access a bank server for each transaction, significantly simplifying the payment process.

Enhancing Security with Beneficiary Name Verification for RTGS and NEFT

In a bid to strengthen security across digital transactions, the RBI also announced the introduction of a Beneficiary Account Name Look-up Facility for RTGS (Real-Time Gross Settlement System) and NEFT (National Electronic Funds Transfer). This feature, already available for UPI and IMPS, allows users to verify the recipient’s name before transferring funds, reducing errors and mitigating fraud risks.

“Currently, UPI and Immediate Payment Service (IMPS) provide users with the ability to confirm the recipient’s name before making a payment. Extending this feature to RTGS and NEFT systems will enable remitters to validate account holder names before initiating fund transfers, thereby minimizing errors and reducing fraud risk,” stated Governor Das.

Increasing UPI’s Role in Tax Payments

Governor Das also highlighted a notable change made in the August 2024 monetary policy statement: the increase of the UPI limit for tax payments from ₹1 lakh to ₹5 lakh. This measure will enable higher-value tax payments via UPI, enhancing the digitalization of the tax process in India.

Conclusion:

The Reserve Bank of India’s decision to hold the key interest rate at 6.5% reflects its balanced approach to macroeconomic stability. However, the true highlight of the policy announcement lies in the UPI transaction limit increases, particularly for UPI 123Pay and UPI Lite, which further boost financial inclusion and ease of use for millions of Indians. UPI limits 2024, By enhancing security with new beneficiary verification features and expanding UPI’s role in tax payments, the RBI is setting the stage for the next phase of digital payment adoption in the country.