Reserve Bank of India Policy News: UPI transactions to medical & education institutes can now be done up to Rs 5 lakh. E-mandate caps were raised to Rs 1 lakh without OTP verification for specific categories.
Reserve Bank of India Update: Facilitating easy digital payments through the Unified Payments Interface (UPI), the transaction limit for payments to hospitals and educational institutions via UPI was increased from Rs 1 lakh to Rs 5 lakh per transaction.
RBI announced this revision on December 8, 2023, in the Monetary Policy Meeting to encourage the use of UPI in critical sectors like healthcare and education. Separate instructions will be issued shortly, the RBI governor said.
Says Rahul Jain – CFO, NTT DATA Payment Services India, "By extending the payment threshold, the RBI is fostering an environment conducive to seamless financial interactions, contributing to India's journey to a digitally empowered nation. It will also boost consumer confidence as far as critical payments are concerned and with UPI on Credit Cards gaining momentum, it's important to enhance this limit."
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The normal transaction limit for UPI is capped at Rs 1 lakh, except in a few categories like Capital Markets (AMC, Broking, Mutual Funds, etc.), Collections (Credit card payments, Loan re-payments, EMI), Insurance, etc., where the transaction limit is Rs 2 lakh.
In December 2021, the transaction limit for UPI payments for Retail Direct Scheme and IPO subscriptions was increased to Rs 5 lakh. Unified Payments Interface (UPI) recorded 11.24 billion transactions in November.
The MPC meeting also increased the limit for e-mandates governing recurring online transactions. E-mandates are instructions to the bank for automatic debits from an account for recurring payments.
The limits for the execution of e-mandates without Additional Factor of Authentication (AFA) currently stand at Rs 15,000 (last updated in June 2022). So, when you initiate an e-mandate, you require an additional factor authentication (one OTP on email and another on mobile) for transactions beyond Rs 15,000.
This limit has been increased to Rs 1 lakh for mutual fund subscriptions, payment of insurance premiums and credit card bill payments. This measure will further accelerate the usage of e-mandates, Shaktikanta Das said.
Says Anil Kumar Aggarwal, MD & CEO, Shriram General Insurance, "Currently, insurers face a challenge in reaching the customer every time premium payments are due, leading to lapses in policy renewal. In the future, insurers can motivate a greater number of customers to sign e-mandates for payment of recurring insurance premium. It will lead to a higher rate of policy renewals, which will subsequently result in better insurance penetration. We commend the RBI for taking this far-sighted decision."
The number of e-mandates registered currently stands at 8.5 crore, processing nearly ₹2800 crores of transactions per month.
The system has stabilised, but in categories such as a subscription to mutual funds, payment of insurance premiums, and credit card bill payments, where the transaction sizes are more than Rs 15,000, a need to enhance the limit has been expressed as adoption has been lagging, RBI said in a release.
The other existing requirements such as pre-and post-transaction notifications, user opt-out facility, etc., shall continue to apply to these transactions. The revised circular will be issued shortly, RBI informed.