UPI limit for health care & education payments increased to 5 lakh

UPI limit for health care & education payments increased to 5 lakh

The Reserve Bank of India has recently announced that the limit of UPI payments related to healthcare and education will increase to 5 lakh from 1 lakh. Before this announcement the limit of these payments through UPI was 1 lakh. This is a strategic move of the RBI to provide benefits for individuals.

Limit of recurring digital payments:

Along with that there is another announcement for the recurring digital payments. The limit of recurring digital payments such as card bills, insurance payments,fund subscription, without one time password (OTP) or second factor authentication through UPI have increased to 1 lakh from 15k.

In current scenario only the amount upto 15000 can be transferred for recurring digital payments through UPI without second factor authentication. Now consumers will have the option to opt out any time as per the announcement of Governor of RBI, Shaktikanta Das.

The recurring digital payments through the authorization of e-mandates have gained popularity among people. There are 8.5 crore e-mandates registered monthly and around 2800 crore amount of transactions took place monthly.

Reason behind the decision:

Further RBI made clear the motive behind this step to increase the UPI limit for recurring digital payments stating that where the transaction size of these payments like credit card bills, insurance payments and subscription to a mutual fund is increased to 15k, there is a need to resolve the issue and bring an enhancement to the current UPI limit.

The reason behind the introduction of UPI in the hospitals,colleges and schools related payments is to encourage the rapidly growing digital payments tool. For this the threshold of the transaction limits for these payments needed to be extended and that is what RBI has done.

The limit of loan repayments and investments was pegged at 2 lakh. However the concurrent limit for investments in IPOs and government bonds had been extended to 5 lakh in December 2021.

Repository for fintechs:

In the statements given by the RBI Governor, he also mentioned another digital initiative to create a repository for fintechs. The work of this repository will be to store information about fintechs like their work, their products, financial details and the working technologies they use. He also encouraged fintechs platform to share information to this repository for betterment of individuals through implementing better policies.

This repository will be made by Reserve Bank Innovation Hub and it will be operational by the mid of 2024 or even earlier if possible as per the announcement of Reserve Bank of India.

Conclusion:

RBI’s decision to increase the UPI limit for health care and education payments depends on two major factors which are growth and inflation. According to the RBI Governor , inflation is the top priority of RBI and it needs to be 4 percent as per the directions. This decision is going to help individuals, healthcare institutions and educational institutes to increase the payment transactions with ease and without any discomfort.

Important Questions:

1. What is the limit of recurring digital payments through UPI?
2. What is the reason behind the increasing limit of UPI payments for healthcare and education?

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