UPI lite limit has been increased before the Diwali festival to facilitate users to spend more. On Wednesday, RBI Governor Shaktikanta Das made a new announcement regarding UPI 123 Pay and UPI Lite to promote UPI service in the country.

RBI has now increased the UPI Lite wallet limit to Rs 5,000. Earlier this limit was Rs 2,000. The limit per transaction has also been increased from Rs 500 to Rs 1,000.

Why was the transaction with UPI lite limit increased?

The Reserve Bank has now increased the per transaction limit for UPI123Pay from Rs 5,000 to Rs 10,000. UPI123Pay was launched in March 2022. This facility is now available in 12 Indian languages. This facility can now be used by a larger user group.

Ramakrishnan Ramamurthy, Chief Distribution and Operations Officer, Worldline in India, says, “It is necessary to expand the capabilities of UPI to make financial services accessible to everyone. UPI 123 Pay and UPI Lite have gained reach and acceptance. In such a situation, increasing the transaction limit is a positive step. This will help in increasing the value of transactions.”

What is UPI Lite?

UPI Lite is a streamlined version of the Unified Payments Interface (UPI) system. Furthermore, it is designed to facilitate smaller, low-value transactions with minimal friction. It was launched by the National Payments Corporation of India (NPCI). Moreover, it is to improve the efficiency of digital payments for amounts less than Rs 1000 now.

Here are some key features of UPI Lite:

1. Offline Transactions: UPI Lite allows users to make transactions without needing an active internet connection. Thus it is beneficial for places with poor connectivity. Moreover, it works on an “on-device wallet” system. Furthermore, users load money into the UPI Lite balance from their bank accounts.
2. No PIN Required: For small transactions (below Rs 500), UPI Lite doesn’t require users to enter their UPI PIN. Thus making the process faster and more convenient.
3. Wallet-Based System: Now users can load up to Rs 5,000 at a time into their UPI Lite account. Furthermore, the total balance in the wallet can go up to Rs 7,000. Transactions are then deducted from this balance.
4. Targeting Small Transactions: UPI Lite is primarily designed for every day. Such as small-value transactions like purchasing groceries, paying for public transport, or small retail purchases.
5. Faster Payments: Payments made are faster by reducing the need for constant connectivity or PIN entry. UPI Lite makes digital payments quicker and more user-friendly for small purchases.

It’s a step toward making India’s digital payments ecosystem more inclusive and accessible, especially in rural or low-bandwidth areas.

The repo rate is fixed at 6.5%

Federal Bank Group President and CFO Venkataraman Venkateswaran said the increase in per transaction for UPI lite limit is a welcome move. Apart from this, the decision of the Monetary Policy Committee (MPC) was announced by the Reserve Bank of India (RBI). The country’s central bank announced to keep the repo rate stable at 6.5%.

RBI Governor Shaktikanta Das informed that five out of six members of the MPC were in favour of keeping the repo rate at 6.5%. Venkateswaran further said, “RBI maintained the repo rate at the same level and changed the stance to neutral, which was largely in line with the consensus. The balance between growth and inflation is well maintained and this was a signal to change the stance.”