New UPI feature to allow multiple users to use one account for transactions

The Reserve Bank of India (RBI) has proposed introducing Delegated Payments feature on Unified Payments Interface (UPI), the widely used digital payments platform, allowing multiple users to make transactions from a single primary bank account.

The holder of the primary bank account can set transaction limits for secondary users linked to the UPI-enabled account.

“This product is expected to add to the reach and usage of digital payments across the country,” the RBI said. UPI has a user base of 424 million.

“Delegated Payments would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user’s bank account. This product is expected to add to the reach and usage of digital payments across the country. Detailed instructions will be issued shortly,” said the RBI in its monetary policy statement on Thursday.

Sameer Nigam, CEO and founder, PhonePe, said, “In particular, it is a great way to introduce kids and senior citizens to the world of digital payments safely and securely.”

Delegated Payments could simplify the UPI payments experience for those users who may not have a bank account, and could improve access to digital payments in regions where a single bank account is shared among family members.

“By introducing this feature, it is anticipated that UPI spends will increase by at least 25-30%, as minors and families begin to utilise the expanded functionality and convenience offered by Delegated Payments,” said Mohit Bedi, co-founder and chief business officer (CBO), Kiwi; a fintech startup.

Meanwhile, RBI has increased the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction, responding to the frequency and higher value of direct and indirect tax payments. The increase in the limit of direct and indirect tax payments follows the regulator’s previous decisions to enhance UPI limits in sectors such as capital markets, IPO subscriptions, loan collections, insurance, medical and educational services.

Public repository for DLAs

Additionally, RBI announced on Thursday that it is creating a public repository of digital lending applications (DLAs) deployed by regulated entities such as banks and non-banking financial companies (NBFCs) to help customers verify associations between DLAs and regulated entities. The repository is being established in view of the presence of unscrupulous players in digital lending falsely claiming their relationship with banks and NBFCs.

“The repository will be based on data submitted by the REs (without any intervention by RBI) directly to the repository and will get updated as and when the REs report the details, i.e., addition of new DLAs or deletion of any existing DLA,” the RBI said on Thursday.

The decision to create a public repository follows the RBI’s call to create a fintech and an emtech (emerging technology) repository. The repositories enable the availability of aggregate sectoral level data, trends, and analytics that can be utilised by policymakers and industry members.