RBI increases UPI Lite transaction limits to Rs 1000, total wallet limit hiked to Rs 5000 from Rs 2000

UPI Lite: The Reserve Bank of India (RBI) has approved an increase in the transaction limit for UPI Lite to Rs 1,000 per transaction, with a total limit of Rs 5,000. The central bank stated that for UPI Lite, the maximum transaction limit has been raised to Rs 1,000 per transaction from Rs 500, with a total limit of Rs 5,000 from previous cap of Rs 2,000. The RBI specified that replenishment of the used limit will only be permitted in online mode with Additional Factor Authentication (AFA). 

"For UPI Lite, the enhanced limits shall be Rs 1,000 per transaction with Rs 5,000 being the total limit. Replenishment of used limit shall be allowed only in online mode with AFA," said the central bank in a statement.

Following the MPC meeting on October 9, 2024, the central bank had revealed adjustments to the transaction limits for UPI 123Pay and UPI Lite. The per-transaction limit for UPI 123Pay was enhanced to Rs 10,000 from Rs 5,000. The total wallet capacity for UPI Lite has been increased from Rs 2,000 to Rs 5,000.

At the October MPC meeting, the RBI introduced these improvements in line with its developmental and regulatory objectives, demonstrating its dedication to fostering the expansion of digital payment platforms. This update is consistent with the central bank's continuous initiatives to advance financial inclusion and broaden the reach of digital payment infrastructures.

The UPI Lite Wallet offers a convenient way for users to conduct small-value transactions without the need for a UPI PIN. Currently, users must manually reload their wallet balance from their bank account to make payments. However, the new auto-top-up feature, developed by the National Payments Corporation of India (NPCI), aims to simplify this process and eliminate the requirement for manual reloading.

The UPI Lite wallet, which now has a wallet limit of Rs 5,000, is anticipated to encourage an increase in low-value offline digital transactions.

In November, UPI processed 15.48 billion transactions totaling Rs 21.55 lakh crore, which marks a 6.6% decrease in transaction volume and an 8.3% decrease in transaction value compared to the previous month. In October 2024, UPI handled 16.58 billion transactions amounting to Rs 23.50 lakh crore.

Compared to September, UPI experienced a 10% increase in transaction volume in October, with 15.04 billion transactions. Last month, UPI demonstrated a year-on-year growth of 38% in transaction volume and 24% in transaction value, with daily averages reaching 516 million transactions totaling Rs 71,840 crore. 

UPI has extended its services beyond the borders of India, now operating in nations including Sri Lanka, Mauritius, France, the UAE, Singapore, Bhutan, and Nepal. Media reports suggest that the National Payments Corporation of India’s international arm (NIPL) is in talks with approximately 20 countries in Africa and South America to help establish payment systems akin to UPI.