The Reserve Bank of India (RBI) on Wednesday announced an increase in the per-transaction limit for UPI 123Pay from ₹5,000 to ₹10,000, and the UPI Lite wallet limit from ₹2,000 to ₹5,000.
The move aims to enhance the utility of digital payments for feature phone users and increase the convenience for those using the UPI Lite wallet for small transactions.
Launched in March 2022 by the RBI and the National Payments Corporation of India (NPCI), UPI 123Pay is designed to enable digital transactions for India’s 400 million feature phone users. It allows users to make UPI payments without needing a smartphone or an internet connection, making digital payments accessible to a wider population.
UPI 123Pay offers four methods for transactions:
- IVR (Interactive Voice Response): Users call a predefined number and follow voice prompts to complete transactions, available in multiple languages.
- Missed Call Approach: Users give a missed call to a merchant-specific number and receive a callback to authenticate the transaction with a UPI PIN.
- App-based Functionality: A simplified UPI app for feature phones that offers basic payment functions.
- Proximity Sound-based Payments: Users tap their phone on a merchant device, using sound waves for contactless payments.
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To set up UPI 123Pay, users create a UPI ID on their feature phone by dialing *99#, selecting their bank, entering their debit card details, and setting a UPI PIN. This system allows secure transactions without internet access, supporting financial inclusion for those without smartphones.
The increase in the UPI Lite wallet limit from ₹2,000 to ₹5,000 aims to facilitate small-value transactions. UPI Lite allows users to store money directly on their device, streamlining payments without needing to access a bank server for each transaction, making everyday payments quicker and more efficient.
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In its latest monetary policy review, the RBI’s Monetary Policy Committee (MPC) retained the repo rate at 6.5%. Governor Shaktikanta Das noted that the unchanged rate allows the RBI greater flexibility to respond to evolving economic conditions. While the stance shifted to “neutral,” indicating a balanced approach between controlling inflation and supporting growth, Das stressed the need to keep inflation within the target of 4%. “The monetary policy action today reflects MPC’s assessment that at the current juncture, it would be appropriate to have greater flexibility and optionality to act in sync with evolving conditions,” he said.
The RBI maintained its GDP growth forecast for FY25 at 7.2%, with projections of 7% growth in Q2, and 7.4% in both Q3 and Q4. For Q1 FY26, the growth rate is estimated at 7.3%. The inflation target remains unchanged at 4.5%, reflecting the central bank’s caution amid geopolitical uncertainties and fluctuating food and energy prices.
