Cabinet Approves ₹1,500 Crore UPI Incentive Scheme for Banks

The Union Cabinet has approved an incentive scheme of ₹1,500 crore for banks to promote Unified Payments Interface (UPI) transactions below ₹2,000 in FY 2024–25. Banks will receive a 0.15% incentive on such transactions made by small merchants, with a portion of the payout contingent on maintaining a reliable UPI infrastructure. The initiative aims to enhance digital payment adoption, particularly among small businesses, without imposing merchant fees.

Key Highlights

Incentive for Small Transactions

  • Banks will receive 0.15% of transaction value for UPI payments below ₹2,000.
  • 20% of the incentive will be linked to the performance of the bank’s UPI infrastructure.

No Incentive for Large Transactions

  • Payments exceeding ₹2,000 will not qualify for the incentive.

Encouraging UPI Expansion

  • The scheme incentivizes merchants to accept UPI transactions without merchant fees.
  • Unlike card transactions that involve charges, UPI remains free for merchants.

Gradual Reduction in Government Outlay

  • The government aims to balance UPI growth while minimizing fiscal expenditure.
  • The 2024-25 target is ₹20,000 crore in total transaction volumes.

Previous Year’s Payouts

  • In FY 2023-24, banks received ₹3,631 crore in incentives, surpassing the previous two years combined.
  • This includes incentives for RuPay debit card transactions.
Summary/Static Details
Why in the news? Cabinet Approves ₹1,500 Crore UPI Incentive Scheme for Banks
Scheme Approval ₹1,500 crore incentive for FY 2024–25
Eligible Transactions UPI payments below ₹2,000
Incentive Rate 0.15% of the transaction value
Bank Performance Link 20% of the incentive depends on UPI reliability
Exclusions Payments above ₹2,000 not eligible
Objective Expand UPI adoption, support small merchants
Total Transaction Target ₹20,000 crore in FY 2024-25
FY 2023-24 Incentives ₹3,631 crore (including RuPay incentives)
Shivam

Recent Posts

PM Modi Receives Oman’s Highest Honour, 29th International Award

Honorable Prime Minister Narendra Modi has been conferred Oman’s highest national honour which is The…

5 hours ago

Who Is Sai Jadhav? India’s First Woman Officer from IMA

A historic moment for India’s armed forces  23 year old Sai Jadhav has become the…

7 hours ago

India and Saudi Arabia Sign Visa Waiver Agreement to Facilitate Official Travel

India and Saudi Arabia have taken another significant step to deepen their growing strategic relationship…

7 hours ago

Bharat Taxi to Roll Out in January 2026 Here You Need To Know

India’s ride hailing market is set to witness a significant shift with the upcoming rollout…

8 hours ago

Army Achieves Major Logistics Milestone With Induction of Tanks into Kashmir Valley

Significant boost to India’s defense logistics and operational readiness, the Indian Army has successfully inducted…

8 hours ago

Overall LFPR Show Upward Momentum as Unemployment Falls to New Low In November 2025

India’s labour market continued to show signs of strengthening in November 2025, with key employment…

9 hours ago