RBI Boosts UPI: Higher Limits for Digital Transactions

The Reserve Bank of India (RBI) has increased the limits for UPI transactions, including UPI 123Pay, which enables digital payments for 400 million feature phone users, and UPI Lite, which streamlines small-value 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.

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