Earlier, the investment limit through UPI was Rs 2 lakh but it has now been extended to Rs 5 lakh.
In what comes as good news for retail investors, the Reserve Bank (RBI) has taken an important step to increase the participation of retail customers in the financial markets. Investors will now be able to pay up to Rs 5 lakh for the IPO of a company and investment in government bonds under RBI's Retail Direct Scheme (RBI-RDS) through UPI (Unified Payments Interface). Earlier, the investment limit through UPI was Rs 2 lakh.
During the monetary policy review on Wednesday, RBI Governor Shaktikanta Das said that this step has been taken to encourage the use of UPI by retail investors. This also includes the facility of investment in government securities (G-secs) through the recently launched Retail Direct Scheme. It also has UPI based payment facility apart from other payment options like internet banking. UPI can be used by investors for payments in both the primary and secondary markets.
The RBI Governor said that UPI has emerged as a popular payment option even for Initial Public Offerings (IPOs). From January 2019, the service of UPI payment for this IPO was started. According to the data, IPO applications of Rs 2-5 lakh account for about 10 per cent of the total subscription applications. In view of this, in March 2020, the transaction limit in the UPI system was increased from Rs 1 lakh to Rs 2 lakh. In order to promote the use of UPI for retail investors, it is proposed to increase the limit of payments through UPI for Retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Instructions will be issued to NPCI in this regard soon.
To make digital transactions more affordable, RBI will soon come out with a discussion paper. Its purpose is to make payment through digital mode affordable. In recent years, there has been a tremendous boom in digital payments. Das said that there is a need to rationalize the charges on digital payments through credit cards, debit cards, prepaid payment instruments (cards or wallets), and UPI so that their use can be economical.
Companies providing digital payments bear the cost, which is usually charged to the merchant or customer or one or more participants. Customers incurring these charges have advantages and disadvantages. These charges should be reasonable. These should not be a hindrance in promoting digital payments. It is proposed to bring a discussion paper to have a comprehensive view on this. It will include all kinds of aspects regarding charges, he said.
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