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RBI proposes to hike limit of UPI transactions for govt bonds, IPOs to Rs 5 lakh

This implies that ordinary investors who use the handy UPI payment method will soon be able to invest up to Rs 5 lakh in government bonds and IPOs under the RBI's RDS scheme. Previously, the maximum was Rs 2 lakh.

RBI proposes to hike limit of UPI transactions for govt bonds IPOs to Rs 5 lakh gcw
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New Delhi, First Published Dec 8, 2021, 1:00 PM IST
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According to Reserve Bank of India Governor Shaktikanta Das, the central bank has proposed raising the transaction limit for payments through the Unified Payments Interface for Retail Direct Scheme for investment in government securities and Initial Public Offering applications from Rs 2 lakh to Rs 5 lakh. This implies that ordinary investors who use the handy UPI payment method will soon be able to invest up to Rs 5 lakh in government bonds and IPOs under the RBI's RDS scheme. Previously, the maximum was Rs 2 lakh. The news came as the Governor of the Reserve Bank of India announced the results of the central bank's bi-monthly policy review meeting.

Since its launch on January 1, 2019, Das stated that UPI has grown in popularity as a payment method for initial public offerings (IPOs). According to reports, IPO applications ranging from Rs 2 to Rs 5 lakh account for around 10% of subscription applications. In March 2020, the transaction limit in the UPI system was increased from Rs 1 lakh to Rs 2 lakh. He added that the central bank has been working to increase retail customer participation in financial markets, citing the launch of the Retail Direct Scheme for G-sec investments, in which 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 established by the National Payments Corporation of India (NPCI), a regulated company under the Reserve Bank of India. UPI is built on the IMPS infrastructure and allows users to immediately transfer money between the bank accounts of any two parties. Given the scarcity of new payment solutions for feature phones, the RBI considered launching a UPI-based payment product for them. The NUUP (National Unified USSD Platform) payment service is presently available on feature phones, but it has not yet been adopted, according to the report.

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The Reserve Bank of India stated that India has a big mobile phone consumer base of over 118 crore mobile users. Approximately 74 crores have smartphones, showing many feature phone users in the country. In terms of transaction volume, UPI is the single largest retail payment system in the country, with 14 crore transactions per day.

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