SEBI Proposes Raising UPI Transaction Limit to ₹5 Lakh for Market Investments

resr 5paisa Research Team

Last Updated: 5th February 2025 - 05:27 pm

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The Securities and Exchange Board of India (SEBI) has proposed increasing the Unified Payment Interface (UPI) transaction limit for capital market investments from ₹2 lakh to ₹5 lakh per day. This recommendation is part of SEBI’s consultation paper issued on January 31, 2025, aiming to enhance security and efficiency in digital transactions.

UPI Transaction Limit Under Review

Currently, the daily transaction cap via UPI for investing in capital markets is ₹2 lakh. SEBI’s proposal to increase this limit to ₹5 lakh is still under consideration and will undergo periodic evaluations in collaboration with the National Payments Corporation of India (NPCI). The regulatory body has indicated that this enhancement will not lead to significant costs or disruptions within the current infrastructure.

Transaction Analysis Leading to SEBI’s Proposal

SEBI conducted a detailed analysis of transaction patterns among investors using UPI for market-related payments. The findings showed that:

  • 92.9% of single transactions were below ₹1 lakh.
  • 3.9% of single transactions ranged between ₹1 lakh and ₹2 lakh.
  • 1.3% of single transactions fell within the ₹2 lakh to ₹3 lakh range.

For total daily transactions per investor, the figures were:

  • 91.5% of daily transactions under ₹1 lakh.
  • 4.6% of daily transactions between ₹1 lakh and ₹2 lakh.
  • 1.6% of daily transactions between ₹2 lakh and ₹3 lakh.

Based on this data, SEBI has proposed the upper limit of ₹5 lakh per day to accommodate investors making larger transactions seamlessly.

Impact on Market Participants

If implemented, this change will benefit investors who frequently make high-value transactions, particularly in equities, mutual funds, and other securities. The process involves four key entities: NPCI, banks, registered intermediaries, and SEBI. NPCI has confirmed that it continuously updates UPI handles for new entrants, ensuring a seamless adaptation to such regulatory changes.

Upcoming NPCI Rule for UPI Transactions

In a separate development, NPCI issued a circular on January 9, 2025, stating that from February 1, all UPI transactions containing special characters in their IDs will be declined. Transaction IDs must be strictly alphanumeric to maintain standardization and prevent processing errors.

Final Thoughts

SEBI’s proposal to increase the UPI transaction limit aligns with the growing adoption of digital payments in India’s financial markets. By allowing larger investment transactions via UPI, SEBI aims to make stock market participation more accessible and efficient for investors. However, the final decision will depend on further evaluations and regulatory approvals in coordination with NPCI.

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