RBI Raises UPI Transaction Limits for P2M Payments

RBI Approves Higher UPI Limits for P2M Payments; Proposes Reforms in Gold Loans, Regulatory Sandbox, and Co-Lending Framework

Mumbai, April 9 (PTI) – The Reserve Bank of India (RBI) has granted the National Payments Corporation of India (NPCI) the authority to revise Unified Payments Interface (UPI) transaction limits for person-to-merchant (P2M) payments in response to evolving user requirements.

NPCI, the umbrella organization managing retail payments and settlement systems in India, operates UPI— a real-time payment platform enabling money transfers between bank accounts via mobile applications.

Currently, UPI transactions—both Person-to-Person (P2P) and P2M—are capped at ₹1 lakh. However, certain specific P2M use cases have higher limits of ₹2 lakh or ₹5 lakh.

“To enable the ecosystem to respond efficiently to new use cases, it is proposed that NPCI, in consultation with banks and other stakeholders, may announce and revise such limits based on evolving user needs,” said RBI Governor Sanjay Malhotra. He also assured that appropriate safeguards would be implemented to mitigate risks associated with higher limits.

While P2M payment limits may be revised, the cap for P2P transactions will remain unchanged at ₹1 lakh. Banks will retain the discretion to set their own internal limits within the NPCI-announced thresholds.

Gold Loan Guidelines Under Review

Governor Malhotra also announced that the RBI will review and harmonize guidelines for loans against gold jewellery. These loans, extended by regulated entities (REs) for both personal consumption and income-generating purposes, currently operate under varying prudential and conduct norms.

“With a view to harmonizing such regulations across REs while considering their risk-taking capabilities and addressing emerging concerns, comprehensive draft guidelines will be issued for public consultation,” Malhotra said.

Regulatory Sandbox to Become ‘Theme Neutral’ and ‘On Tap’

The RBI further proposed significant changes to its Regulatory Sandbox (RS) framework to promote ongoing innovation. Since 2019, four thematic cohorts have been completed, with a fifth—’theme neutral’—cohort open until May 2025.

“Based on our experience and stakeholder feedback, the Regulatory Sandbox will now be made ‘theme neutral’ and ‘on tap’,” the governor stated, allowing fintech companies to apply anytime with innovative solutions that fall within RBI’s regulatory purview.

Draft Framework for Securitisation of Stressed Assets

To further strengthen financial resilience, the RBI will introduce a draft framework to facilitate the securitisation of stressed assets via market-based mechanisms. This will complement the existing route through Asset Reconstruction Companies (ARCs) under the SARFAESI Act, 2002.

Expansion of Co-Lending Framework

Lastly, the RBI announced plans to broaden the scope of co-lending beyond the current model, which only covers arrangements between banks and Non-Banking Financial Companies (NBFCs) for priority sector lending.

“In light of evolving lending practices and the potential to address broader credit needs sustainably, we will introduce a generic regulatory framework applicable to all forms of co-lending arrangements among regulated entities,” Malhotra said. Draft guidelines will soon be released for stakeholder input.