Getty ImagesThe Reserve Bank of India (RBI), in its bi-monthly monetary policy review on December 8, 2021, announced that it has enhanced the investment limit via UPI in IPOs and RBI Retail Direct Scheme for G-Secs to Rs 5 lakh. The current limit is Rs 2 lakh for making investments in IPO and or buying government bonds via RBI Retail Direct Scheme. Other announcements regarding UPI payments include:
a) Launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments;
(b) Make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications;
As per the RBI governor statement, "UPI is the single largest retail payment system in the country in terms of volume of transactions, indicating its wide acceptance, particularly for small value payments. In order to further deepen digital payments and make them more inclusive, ease transactions for consumers, facilitate greater participation of retail customers in various segments of financial markets and enhance the capacity of service providers. It is proposed to (i) launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments; (ii) make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications; and (iii) enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh. "
In its Statement on Developmental and Regulatory Policies, "Reserve Bank has been making efforts to facilitate greater participation of retail customers in financial markets, e.g. investment in the G-secs segment through the
recent launch of Retail Direct Scheme, where UPI, in addition to other options such as internet banking, can be used to make payments for participating in both the primary and secondary markets. Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 01, 20194. It is
reported that IPO applications of Rs 2 to Rs 5 lakh constitute approximately 10 per cent of subscription applications. The transaction limit in the UPI system was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020. To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly."
The statement added, "UPI is the single largest retail payment system in the country in terms of volume of
transactions (14 crore transactions per day, October 2021). One of the initial objectives of UPI was to replace cash for low-value transactions. Transaction data analysis shows that 50 per cent transactions through UPI were below Rs 200, indicating its success. These low-value transactions, however, utilise significant system capacity and resources, at times leading to customer inconvenience due to transaction failures because of issues related to connectivity. It is, therefore, proposed to offer a simpler process flow by enabling small value transactions through an “On-device” wallet in UPI app which will conserve banks’ system resources, without any change in the
transaction experience for the user."
How does UPI work?
It allows the transfer of money from one bank account to another instantly via one's mobile phone. Payments can be made via an app such as BHIM, PhonePe, Gpay etc. on mobile device only. The money transfer via UPI works on a 24x7 basis.
An individual must have a bank account with a member bank to be able to use the UPI facility. The member banks includes State Bank of India (SBI), HDFC Bank and ICICI Bank.
Also Read: How UPI works
a) Launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments;
(b) Make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications;
As per the RBI governor statement, "UPI is the single largest retail payment system in the country in terms of volume of transactions, indicating its wide acceptance, particularly for small value payments. In order to further deepen digital payments and make them more inclusive, ease transactions for consumers, facilitate greater participation of retail customers in various segments of financial markets and enhance the capacity of service providers. It is proposed to (i) launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments; (ii) make the process flow for small value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications; and (iii) enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh. "
In its Statement on Developmental and Regulatory Policies, "Reserve Bank has been making efforts to facilitate greater participation of retail customers in financial markets, e.g. investment in the G-secs segment through the
recent launch of Retail Direct Scheme, where UPI, in addition to other options such as internet banking, can be used to make payments for participating in both the primary and secondary markets. Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 01, 20194. It is
reported that IPO applications of Rs 2 to Rs 5 lakh constitute approximately 10 per cent of subscription applications. The transaction limit in the UPI system was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020. To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly."
The statement added, "UPI is the single largest retail payment system in the country in terms of volume of
transactions (14 crore transactions per day, October 2021). One of the initial objectives of UPI was to replace cash for low-value transactions. Transaction data analysis shows that 50 per cent transactions through UPI were below Rs 200, indicating its success. These low-value transactions, however, utilise significant system capacity and resources, at times leading to customer inconvenience due to transaction failures because of issues related to connectivity. It is, therefore, proposed to offer a simpler process flow by enabling small value transactions through an “On-device” wallet in UPI app which will conserve banks’ system resources, without any change in the
transaction experience for the user."
How does UPI work?
It allows the transfer of money from one bank account to another instantly via one's mobile phone. Payments can be made via an app such as BHIM, PhonePe, Gpay etc. on mobile device only. The money transfer via UPI works on a 24x7 basis.
An individual must have a bank account with a member bank to be able to use the UPI facility. The member banks includes State Bank of India (SBI), HDFC Bank and ICICI Bank.
Also Read: How UPI works
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