The Reserve Bank of India on Wednesday announced an increase in transaction limits for UPI123Pay and UPI Lite as part of efforts to encourage wider adoption of UPI. The central bank announced several other regulatory and developmental measures as well after announcing its fourth bi-monthly monetary policy decision of the ongoing fiscal year.

In order to widen the use-cases, in consultation with the stakeholders, it has been decided to enhance the per-transaction limit to Rs 10,000 for UPI123Pay, the apex bank said in a statement. Necessary instructions will be issued to National Payments Corporation of India (NPCI) shortly, it added.

What is UPI123pay?

UPI123 was launched in March 2022, with a view to enable feature-phone users to use UPI. This facility is now available in 12 languages. Currently, the per-transaction limit in UPI123Pay is capped at Rs 5000.

The RBI has also enhanced the transactional limits for UPI Lite to widen the scope of usage of this product.

Also read: ICICI Bank offers THESE customers instant credit on UPI for up to Rs 2 lakh! Here’s how to activate credit line

“It has now been decided to increase the UPI Lite wallet limit to Rs 5,000 and per-transaction limit to Rs 1,000. The framework for facilitating small value payments in offline digital mode, issued by the Reserve Bank, under which UPI Lite has been enabled, will be suitably amended,” the central bank said.

What is UPI Lite?

A limit of Rs 500 per transaction and an overall limit of Rs 2000 per UPI Lite wallet was applicable earlier, with the facility of auto-replenishment.

UPI LITE facility was launched with an aim to enable low value transactions for customers without utilising a remitter bank’s core banking systems in real-time, while providing adequate risk mitigation.

“This move is a significant step towards financial inclusion. These new limits will allow the feature phone users to access higher value transactions with the UPI123 pay utilizing four technology options to support this growth. The broader benefit is that this will also encourage lower cash usage especially in the rural economy and will eventually help these users become credit worthy on the basis of their cash flows,” says Rochak Bakshi, Founder & CEO, True North Financial Services.

Also read: RBI enhances UPI transaction limits for THESE payments – Details here

What are the benefits of UPI Lite?

  • Improved success rate for UPI transactions
  • Less infrastructure load on Remitter Bank CBS
  • Uncluttered Passbook for users
  • One click single factor authentication for UPI transactions of value less than Rs 1000.

Meanwhile, the Reserve Bank on Wednesday maintained a status quo on key interest rate, repo rate, for the 10th straight time in the last nearly two years.