UPI 123Pay, UPI Lite limits increased: What RBI MPC decision means for you

First Published Oct 9, 2024, 11:41 AM IST | Last Updated Oct 9, 2024, 12:06 PM IST

In a significant move aimed at enhancing digital payment accessibility, the Reserve Bank of India (RBI) on Wednesday (October 9) announced an increase in the per-transaction limit for UPI 123Pay and UPI Lite during its latest monetary policy review. The limit for UPI 123Pay has been doubled from Rs 5,000 to Rs 10,000, while the UPI Lite wallet limit has been raised from Rs 2,000 to Rs 5,000.

This decision reflects the RBI's ongoing efforts to promote financial inclusion and support small-value transactions across India.

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Launched in March 2022, UPI 123Pay is designed to make digital transactions accessible to India’s 400 million feature phone users, a large section of the population without access to smartphones or stable internet connections. The RBI's decision to increase the per-transaction limit to Rs 10,000 enables users to perform higher-value transactions, improving the utility of this platform for non-smartphone users.

UPI 123Pay operates through four key methods:

IVR (Interactive Voice Response): Users call a number and follow voice prompts to complete payments.
Missed Call Approach: Users give a missed call to a merchant number, receive a callback, and authenticate with their UPI PIN.
App-based Functionality: A simplified UPI app for feature phones offering basic payments.
Proximity Sound-based Payments: Users tap their phones for contactless payments using sound waves.

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The increase in UPI Lite's wallet limit to Rs 5,000 is another step towards simplifying everyday payments. UPI Lite allows users to store money directly on their device, enabling faster and more efficient transactions by reducing the need to access bank servers for every small payment.

This is particularly beneficial for frequent, low-value transactions, such as paying for groceries or public transport.

In addition to these changes, the RBI's Monetary Policy Committee (MPC) maintained the repo rate at 6.5%, prioritizing economic flexibility amid evolving global conditions. Governor Shaktikanta Das stressed that this decision allows the RBI to balance inflation control and support for growth.

The RBI retained its GDP growth forecast for FY25 at 7.2%, signaling cautious optimism as it navigates geopolitical uncertainties. Inflation remains a key focus, with a target of 4.5%.