RBI raises UPI limit for IPOs, direct govt bonds investment scheme to Rs 5 lakh

RBI increases UPI limit.

By Harshita Tyagi

The Reserve Bank of India has raised the UPI limit to Rs 5 lakh from Rs 2 lakh for investment in IPOs and buying government bonds via RBI Retail Direct Scheme. RBI Governor Shaktikanta Das said in his Monetary Policy Address: “It is proposed to … enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh.”

The central bank in its statement mentioned that it has been making efforts to facilitate greater participation of retail customers in financial markets, e.g. investment in the G-secs segment through the recent launch of Retail Direct Scheme, where UPI, in addition to other options such as internet banking, can be used to make payments for participating in both the primary and secondary markets.

Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 01, 20194. It is reported that IPO applications of Rs 2 to Rs 5 lakh constitute approximately 10 per cent of subscription applications. The transaction limit in the UPI system was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020. it added.

“To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for Retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh,” RBI said.

Experts believe, RBI’s decision to increase the limit of investment in IPO and G-secs through UPI is a prudent step that will foster financial inclusiveness and drive investments. “UPI is no more just a technology enabler but a crucial cog in India’s fintech ecosystem. As digital payment systems are set to trump offline transactions, increasing the limit is a welcome step. This is also in sync with the government’s long-term agenda to build start-up India and Digital India,” said Siddharth Maurya, Resource Specialist, Fund Management.

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