Key Highlights
- RBI has empowered NPCI to modify the ceiling for UPI‑based Person‑to‑Merchant (P2M) transactions, reflecting shifting market requirements.
- While P2M limits can now reach ₹2 lakh or ₹5 lakh for designated sectors such as education, healthcare, and credit‑card bill settlement, the Person‑to‑Person (P2P) ceiling stays fixed at ₹1 lakh.
- Financial institutions may impose internal caps within the range defined by NPCI, ensuring flexibility for merchants and consumers.
- Concurrently, RBI unveiled new guidelines for gold‑backed loans, a theme‑neutral regulatory sandbox, a framework for securitising stressed assets, and an expanded co‑lending model.
Detailed Insights
The Reserve Bank of India, on 9 April 2025, signaled a decisive shift in the digital payments arena by delegating to the National Payments Corporation of India the authority to recalibrate transaction limits for UPI‑enabled P2M payments. This adjustment is intended to accommodate burgeoning use‑cases, notably tuition fee payments, medical expenses, and settlement of credit‑card dues via UPI. Banks retain discretion to set tighter internal thresholds, provided they fall within NPCI‑prescribed bounds.
Despite the upward revision for merchant‑facing transactions, the P2P limit remains unchanged at ₹1 lakh, preserving the status quo for peer‑to‑peer transfers. RBI emphasized that robust risk‑mitigation mechanisms will accompany the higher limits to safeguard the payment ecosystem.
In parallel, RBI announced a suite of regulatory reforms: (i) a harmonised set of prudential norms for gold‑loan products across all regulated entities, (ii) a continuously available, theme‑neutral regulatory sandbox to spur fintech innovation, (iii) a draft framework for market‑driven securitisation of stressed assets beyond the existing ARC route, and (iv) an expanded co‑lending framework that will encompass a broader spectrum of regulated institutions, aiming to deepen credit access.
Key Concepts
- Unified Payments Interface (UPI): A real‑time payment system that enables inter‑bank transactions through mobile devices, supporting both P2P and P2M flows.
- Person‑to‑Merchant (P2M) Limit: The maximum monetary value that a user can transfer to a merchant in a single UPI transaction, now adjustable up to ₹5 lakh for specific sectors.
- National Payments Corporation of India (NPCI): The umbrella organization that operates retail payment systems in India, now authorized to set variable UPI limits.
- Regulatory Sandbox: A controlled environment where fintech innovators can test new products under regulator supervision; RBI’s version will be theme‑agnostic and continuously accessible.
- Co‑Lending Framework: A collaborative credit‑dispensing model where multiple regulated entities jointly fund borrowers, recently broadened to include entities beyond banks and NBFCs.