India: RBI hiking UPI transaction limits gets an industry thumbs up
In yet another boost for the Unified Payments Interface (UPI), the Reserve Bank of India on Friday raised the transaction limit for payments to hospitals and educational institutions via the homegrown platform.
The central bank will enhance the transaction limit from ₹1 lakh to ₹5 lakh per transaction. This, the RBI said, will help consumers make UPI payments of higher amounts for education and healthcare purposes.
Given the rising popularity of e-Mandates for making recurring payments, transaction limits for e-Mandates have been hiked from ₹15,000 to ₹1 lakh. This is likely to help consumers make recurring payments for mutual funds, insurance premium and credit cards.
Medical, education sectors welcome move
Welcoming the hike in the transaction limits, Gaurav Gupta, Co-Founder, CarePay, said that the previous limit of ₹1 lakh was simply too low, especially for major surgeries in metropolitan and Tier 1 cities.
"UPI is already the preferred payment method for many patients. Patients are understandably worried about their treatment during such critical times. Technologies like UPI empower them to focus on getting better without the stress of managing large payments," he said.
The education sector, estimated to be worth $117 billion, too lauded the move, arguing that the limit hike will ease large educational transactions.
"Education expenses can be quite significant and are usually accompanied by strict deadlines. However, the forward-looking move will help students and their parents to make seamless payments without relying on alternatives like demand drafts," said Dr Christopher Abraham, Head of Campus (Dubai), SP Jain School of Global Management.
He added that the move will not only empower institutes to effectively manage their finances but also smoothen financial processes involving research grants, infrastructure development, and other institutional expenses.
Echoing similar views, Neeti Sharma, Co-founder of TeamLease Edtech, said that the enhanced UPI limit will make education-related transactions "more student-friendly".
Boost to fintech sector
During his presser, RBI Governor Shaktikanta Das also proposed to set-up a 'Fintech Repository', which is expected to help give a better understanding of developments in the Fintech ecosystem. "This will be operationalised by the Reserve Bank Innovation Hub in April 2024 or earlier," he added.
Anand Agrawal, Co-Founder, Credgenics, called the proposal a "positive move", adding that it will act as a catalyst for further innovation in the fintech sector.
"It will foster collaboration among fin-techs, financial services industry, and regulators. Encouraging voluntary contributions from fin-techs will empower regulators with real-time insights and enable informed, agile, and risk-mitigating decision-making," he said.
Led by the UPI platform, India's fintech sector is making waves across the world. As per various reports, India's fintech sector is the third-largest and is among the fastest-growing in terms of funding and deal volumes.
Helped by a robust Digital Public Infrastructure, consulting giant BCG predicts that Indian fintech revenues will grow 35 per cent each year to reach $190 billion by 2030.