The Reserve Bank of India (RBI) Governor Shaktikanta Das said the central bank has proposed to enhance the transaction limit for payments through Unified Payments Interface (UPI) for the Retail Direct Scheme (RDS) for investment in government securities and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh.
This essentially means that retail investors using the convenient UPI payment system will soon be able to invest upto Rs 5 lakh in government bonds under RBI’s RDS scheme and IPOs. The limit was Rs 2 lakh earlier.
RBI Governor made the announcement while announcing the outcome of the central bank’s bi-monthly policy review meeting.
“Over time, UPI has become a popular payment option for IPOs since its availability from January 01, 2019. 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,” said Das, on Developmental and Regulatory Policies of the RBI.
He added the central bank has been making efforts to facilitate greater participation of retail customers in financial markets, citing the launch of Retail Direct Scheme for investments in G-secs, 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.
UPI is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI regulated entity. UPI is built over the IMPS infrastructure and allows users to instantly transfer money between any two parties’ bank accounts.
UPI for feature phones
The RBI also proposed to launch a UPI-based payment product for feature phone users given the limited access to innovative payment products for such devices. Feature phones currently have NUUP (National Unified USSD Platform) payment service but the same has not picked up, it noted.
RBI noted that India has a large mobile phone consumer base of about 118 crore mobile users out of which about 74 crore have smart phones indicating that there is a significant number of feature phone users in the country.
Simplification of small value transactions
RBI also proposed enabling small-value UPI 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 feature was proposed to make low-value UPI transactions, which form 50% of on the interface, easier.
“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”, said RBI statement.
UPI is the single largest retail payment system in the country in terms of volume of transactions registering 14 crore transactions per day. Transaction data analysis shows that 50 per cent of transactions through UPI were below Rs 200, indicating its success
