RBI Permits NPCI to Enhance UPI Transaction Limits for P2M Payments

The Reserve Bank of India (RBI), on April 9, 2025, announced a major step in India’s digital payments landscape by authorizing the National Payments Corporation of India (NPCI) to revise transaction limits for UPI-based Person-to-Merchant (P2M) payments. This move comes in response to evolving user demands and use cases in the UPI ecosystem. However, Person-to-Person (P2P) transaction limits remain unchanged at ₹1 lakh.

Key Highlights

RBI Decision

• RBI has permitted NPCI to revise P2M transaction limits under UPI as per evolving use cases and user needs.
• Banks will have the discretion to set internal limits within the range announced by NPCI.

Current Transaction Caps

• General UPI limit: ₹1 lakh for both P2P and P2M.

Exceptions (P2M only): Up to ₹2 lakh or ₹5 lakh in specific use cases such as,

• Education
• Healthcare
• Credit card bill payments (via UPI)

P2P Payments

• Cap remains unchanged at ₹1 lakh.

Rationale

• To allow greater flexibility for merchants and users amid growing adoption of digital payments.
• To support innovation and adoption in the fintech space.

Risk Management

• Appropriate safeguards will be implemented to manage risks from higher limits.

Additional Announcements by RBI

Gold Loan Guidelines

• RBI will issue comprehensive prudential and conduct norms to harmonize regulations for loans against gold jewellery across all regulated entities (REs).
• Draft guidelines to be released for public consultation.

Regulatory Sandbox (RS)

• RS will now be theme-neutral and ‘on tap’, allowing continuous innovation.
• Earlier cohorts were based on specific themes with fixed timelines.
• The change is aimed at keeping pace with the dynamic fintech ecosystem.

Securitisation of Stressed Assets

• Draft framework will be introduced to enable a market-based mechanism for securitising stressed assets, beyond the current ARC route under SARFAESI Act, 2002.

Co-Lending Framework Expansion

• RBI plans to expand co-lending beyond banks and NBFCs.
• A generic regulatory framework for all types of co-lending among REs will be developed.
• Objective: to widen access to credit and foster sustainable lending partnerships.