The central bank will shortly issue separate instructions to the National Payment Corporation of India (NPCI) in this regard.
The transaction data analysis shows that 50% transactions through UPI were below Rs 200, indicating its success.By Piyush Shukla
The Reserve Bank of India (RBI) has proposed increasing the transaction limit for payments made through Unified Payments Interface (UPI) for the Retail Direct Scheme and initial public offering (IPO) applications to Rs 5 lakh from Rs 2 lakh. The central bank will shortly issue separate instructions to the National Payment Corporation of India (NPCI) in this regard.
In a statement on developmental and regulatory policies issued post the monetary policy committee meeting, the central bank said over time the UPI has become a popular payment option for IPOs and reportedly, IPO applications of Rs 2 lakh to Rs 5 lakh constitute approximately 10% of all subscription applications. The transaction limit in the UPI system was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020 and to further encourage the use of UPI by retail investors, the central bank has proposed increasing the UPI transaction limit.
The RBI Retail Direct Scheme was launched on November 12 to facilitate retail investors to open a retail direct gilt account to invest in primary issuance and secondary market transactions in government securities (G-Secs).
The central bank said UPI is the single-largest retail payment system in the country, with 14 crore transactions per day according to October data, and one of the initial objectives of UPI was to replace cash for low-value transactions. The transaction data analysis shows that 50% 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,” the RBI said.
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