RBI Boosts UPI: Higher Limits for Digital Transactions

UPI 123Pay: Empowering Feature Phone Users

• UPI 123Pay limit increased from ₹5,000 to ₹10,000 per transaction.
• Launched in March 2022 to  enable digital payments for 400 million feature phone users.

Operates without internet connectivity through four methods:

• 1. Interactive Voice Response (IVR)
  2. Missed Call Transactions
  3. App-based Payments for Feature Phones
  4. Proximity Sound-based Payments
• Supports financial inclusion by providing digital payment solutions to a broader population.
• Available in 12 languages, enhancing accessibility.

UPI Lite: Streamlining Small-Value Transactions

• Wallet limit increased from ₹2,000 to ₹5,000.
• Per-transaction limit raised from ₹500 to ₹1,000.
• Designed for frequent, low-value transactions.
• Operates without accessing bank servers for each transaction.
• Ideal for areas with limited internet connectivity.
• Allows users to store money directly on their devices.
• Auto-replenishment feature available.

Additional UPI Enhancements

• Proposal to increase the general UPI transaction limit from ₹1 lakh to ₹5 lakh.
• Aim to facilitate higher-value payments and ease tax payments through UPI.
• Introduction of delegated payments:
  • Allows primary users to authorize secondary users for transactions up to a specified limit.
  • Secondary users don't need a separate bank account linked to UPI.
• RBI to create a public repository of digital lending apps:
  • Aims to curb problems from unauthorized lending apps.
  • Banks and financial institutions to report and update information about their lending apps.

Impact and Future Outlook

• Changes aimed at encouraging wider adoption of digital payments.
• UPI network processed over 500 million daily transactions in September 2023.
• Transaction values consistently above ₹20 lakh crore for five consecutive months.
• Average daily transaction values reached ₹68,800 crore in September, up from ₹66,475 crore in August.
• 31% year-on-year increase in UPI transactions to ₹20.64 lakh crore.
• Introduction of beneficiary account name look-up facility for RTGS and NEFT:
  • Allows remitters to verify beneficiary names before initiating transfers.
  • Aims to reduce wrong credits and potential frauds.
• Proposal to increase credit information reporting frequency to fortnightly or shorter intervals.
  • Benefits borrowers with faster credit information updates.
  • Enables lenders to make better risk assessments.