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Imposing Daily Limits on UPI Transactions


With a significant increase in Unified Payments Interface (UPI) transactions, banks and UPI apps have taken the decision to impose daily limits on UPI transactions. This decision comes in addition to the limits already set by the National Payments Corporation of India (NPCI) in 2021.


GS III: Indian Economy

Dimensions of the Article:

  1. Limits Imposed on UPI Transactions
  2. Significance of Limits on UPI Transactions
  3. What is Unified Payments Interface (UPI)?

Limits Imposed on UPI Transactions

Limits by NPCI:
  • Daily limit set by NPCI allows users to make up to 20 transactions or ₹1 lakh in a single day.
  • Certain specific categories of transactions, such as capital markets, collections, insurance, and forward inward remittances, have a higher limit of ₹2 lakh.
  • For UPI-based ASBA  (Application Supported by Blocked Amount system) IPO and retail direct schemes, the transaction limit was increased to ₹5 lakh in December 2021.
  • ASBA facilitates investors to participate in IPOs and invest in the stock market without transferring funds upfront.
Limits by Banks/Apps:
  • Some banks and UPI apps have their own transaction limits.
  • Punjab National Bank (PNB) and Bank of Baroda have set a lower limit of ₹25,000, with PNB’s daily limit being ₹50,000.
  • Google Pay users need to be cautious as exceeding ten transactions in a single day across all UPI apps may breach the daily limit.

Significance of Limits on UPI Transactions

Security and Functionality:

  • Limits play a crucial role in maintaining the security infrastructure of UPI.
  • They help prevent fraudulent activities and mitigate risks associated with high-value transactions.
  • By setting limits, UPI ensures the smooth and seamless functioning of the payment system.

Fraud Prevention:

  • Imposing limits assists in preventing potential fraud and unauthorized transactions.
  • It acts as a safeguard against malicious activities and unauthorized access to funds.

Balancing Customer Convenience:

  • While ensuring security, limits are set to balance customer convenience.
  • They provide a reasonable threshold for daily transactions, allowing users to carry out their routine financial activities without unnecessary restrictions.

Catering to Specific Categories:

  • Setting different limits for specific transaction categories caters to the varying needs of users.
  • Higher limits are established for categories with higher average transaction values, such as capital markets or credit card bill payments.
  • This enables users to carry out larger transactions within the specified limits, promoting flexibility and ease of use.

What is Unified Payments Interface (UPI)?

  • Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
  • UPI, which was introduced in 2016, has become one of the most used digital payments platforms in the country.
  • Advantages of UPI Includes – Immediate money transfer through mobile device round the clock 24*7 and 365 days.
  • UPI Enables Single mobile application for accessing different bank accounts with Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines yet provides for a very strong feature of seamless single click payment.
  • It also features Virtual address of the customer for Pull & Push providing for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc.
National Payments Corporation of India
  • National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
  • It is a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.

-Source: The Hindu

December 2023