UPI limit for investing in IPOs, RBI Retail Direct Scheme government bonds increased to Rs 5 lakh

The Reserve Bank of India (RBI), in its bimonthly Monetary Policy Review of December 8, 2021, announced that it has increased the limit for investment through UPI in IPOs and RBI Retail Direct Scheme for G-Secs to Rs 5 lakh. The current limit is Rs 2 lakh to make investments in the IPO and / or buy government bonds through the RBI Retail Direct Scheme. Other announcements regarding UPI payments include:

a) Launch UPI-based payment products for multifunction phone users, leveraging innovative products from the RBI regulatory sandbox on retail payments;

(b) Simplify the process flow for low value transactions through an “on-device” wallet mechanism in UPI applications;

According to the RBI governor’s statement, “UPI is the largest retail payment system in the country in terms of transaction volume, indicating its wide acceptance, especially for small value payments. digital payments and make them more inclusive, facilitate transactions for consumers, facilitate greater participation of retail clients in various segments of financial markets and strengthen the capacity of service providers. It is proposed to (i) launch products payments based on UPI for multifunction phone users, leveraging the innovative products of the RBI Regulatory Sandbox on Retail Payments; (ii) simplify the process flow for low value transactions through a wallet mechanism “on the device” in UPI applications; and (iii) increase the transaction limit for payments via UPI for Retail Direc t Scheme for investment in G-secs applications and initial public offering (IPO) from Rs 2 lakh to Rs 5 lakh. ”

In its statement on development and regulatory policies, “Reserve Bank has sought to facilitate greater participation of retail clients in financial markets, for example by investing in the G-secs segment through the

recent launch of Retail Direct Scheme, where UPI, in addition to other options such as online banking, can be used to make payments to participate in both primary and secondary markets. Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 1, 2019.4 It is

reported that IPO requests of Rs 2 to Rs 5 lakh constitute around 10 percent of subscription requests. The transaction limit in the UPI system has been increased from Rs 1 lakh to Rs 2 lakh in March 2020. To further encourage the use of UPI by retail investors, it is proposed to increase the transaction limit for payments through UPI for the retail direct program and the IPO. requests from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly. ”

The statement added, “UPI is the country’s largest retail payment system in terms of volume of

transactions (14 crore transactions per day, October 2021). One of UPI’s original goals was to replace cash for low value transactions. Analysis of transaction data shows that 50% of transactions through UPI were below Rs 200, indicating its success. However, these low-value transactions use significant capacity and system resources, sometimes causing inconvenience to customers due to transaction failures due to connectivity issues. It is therefore proposed to offer a simpler process flow by enabling low value transactions through an ‘on the device’ wallet in the UPI application which will conserve the system resources of the banks, without any change in the

transaction experience for the user. ”

Also read: Everything you need to know about the RBI Retail Direct program

Also Read: How To Register On The RBI Retail Direct Program Website

Also read: Pros and Cons of Investing in the RBI Retail Direct Program

How does the UPI work?

It allows the transfer of money from one bank account to another instantly via their mobile phone. Payments can be made through an app like BHIM, PhonePe, Gpay, etc. on a mobile device only. Money transfer via UPI works 24/7.

A person must have a bank account with a member bank in order to use the UPI service. Member banks include State Bank of India (SBI), HDFC Bank, and ICICI Bank.

Also Read: How UPI Works


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