Explained: What is RBI-proposed ‘Delegated Payment’ via UPI?

The RBI has proposed to introduce a new provision called "Delegated Payments" through UPI. The step is aimed at further deepening the reach and usage of digital payments.

Hyderabad: Even as RBI Governor Shaktikanta Das announced enhancements to transaction limits via UPI, this mode of payment, has become the most preferred one, due to its seamless features.

Currently, the transaction limit for UPI is capped at Rs 1 lakh. Based on the various use cases, the Reserve Bank has periodically reviewed and enhanced the limits for a few categories like capital markets, IPO subscriptions, loan collections, insurance, medical and educational services, etc. It has been decided that the limit for tax payments through UPI will be enhanced from Rs 1 lakh to Rs 5 lakh per transaction.

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In another useful and welcome move, the RBI has proposed to introduce a new provision called “Delegated Payments” through UPI. The step is aimed at further deepening the reach and usage of digital payments.

“Delegated Payments” Explained

With the introduction of “Delegated Payments” a user of UPI, say “User 1” for reference, can now enable another UPI user – “User 2” – to make payments using UPI account attached to the former’s bank account. With this provision, the User 1 will be able to set a UPI transaction limit for the User 2.

This way, User 2 doesn’t need a separate bank account linked to UPI, making it convenient to manage digital payments within families in an easier and safer manner.

Use Case: Children can pay school or college-related expenses from their parents’ bank accounts. Some senior citizens can also authorise their kids to make certain payments on their behalf.