The announcement came after a three-day meeting of its Monetary Policy Committee (MPC).
The RBI has kept repo rate the central bank's lending rate unchanged at 4 per cent and reverse repo rate borrowing rate at 3.35 per cent.
Earlier this month, the governor had announced a slew of measures, including term liquidity facility of Rs 50,000 crore to ease access to emergency health services.
Banks desirous of deploying their own resources without availing funds from the RBI under the scheme for lending to the specified segments mentioned above will also be eligible for the incentives.
Borrowers that are individuals and micro, small and medium enterprises (MSMEs) having an aggregate exposure of up to Rs 25 crore would be considered for the new scheme.
In the week ended April 16, 2021, the increase in reserves was mainly due to a rise in foreign currency assets (FCAs), a major component of the overall reserves
The RBI's decision to increase the balance limit is an endorsement of the role Payments Banks have in furthering financial and digital inclusion in India.