The Securities Exchange Board of India (Sebi) has proposed an increase in the daily transaction limit for capital market transactions via the Unified Payment Interface (UPI) from ₹2 lakh to ₹5 lakh. This change is part of a consultation paper aimed at enhancing the efficiency and safety of UPI transactions. The new limit is subject to ongoing evaluation and is not yet finalized.
Sebi has indicated that the daily transaction limit for capital market transactions via UPI is set to increase to ₹5 lakh. This is not yet a final decision but part of a draft circular dated January 31, 2025, which aims to ensure safe and efficient money transfers. The increase is intended to facilitate larger transactions, which could benefit investors and the capital market as a whole.
Analysis of Current Transactions
To support this proposal, Sebi conducted an analysis of transaction data from clients of major brokers. The findings revealed that:
- 92.9% of individual transactions are below ₹1 lakh.
- 3.9% fall between ₹1 lakh and ₹2 lakh.
- 1.3% are between ₹2 lakh and ₹3 lakh.
When looking at the total transactions made by an investor in a day, the percentages were slightly different, with 91.5% under ₹1 lakh, 4.6% between ₹1 lakh and ₹2 lakh, and 1.6% between ₹2 lakh and ₹3 lakh. These statistics suggest that there is currently limited demand for transactions exceeding ₹2 lakh, which Sebi aims to address with the proposed increase.
Cost Implications and Process
Sebi has stated that the implementation of the new ₹5 lakh limit is unlikely to incur significant costs. The process involves four key players: NPCI, banks, registered intermediaries, and Sebi itself. NPCI has confirmed that they are continuously issuing new UPI handles, ensuring their systems can accommodate these changes.
NPCI Circular on Transaction IDs
In a related update, NPCI announced that starting February 1, 2025, the central system will automatically decline any transactions that include special characters. Currently, transaction IDs are supposed to be alphanumeric, but some have included special characters. This move aims to simplify and standardize the transaction process, reducing the likelihood of errors.
Final Takeaways
The proposed increase in the UPI transaction limit to ₹5 lakh reflects Sebi’s effort to adapt to the evolving needs of the capital market while ensuring safe and efficient transactions. The data analysis indicates that most transactions remain below ₹1 lakh, suggesting that while the demand for higher limits is low, the flexibility could benefit certain investors. Additionally, NPCI’s decision to eliminate transactions with special characters will further streamline the process. Overall, these changes aim to enhance the user experience in capital market transactions via UPI, ensuring that the system remains robust and user-friendly.
