Amendment to Framework for Facilitating Small Value Digital Payments in Offline Mode
The Reserve Bank of India (RBI) has amended its framework for small-value digital payments in offline mode. This amendment builds on the original guidelines issued via circular CO.DPSS.POLC.No.S1264/02-14-003/2021-2022, dated January 3, 2022, and subsequently updated on August 24, 2023. The framework was initially designed to facilitate digital payments in offline settings, specifically targeting areas with limited connectivity.
The original framework prescribed an upper limit of ₹500 for each offline transaction and a cumulative limit of ₹2,000 for any payment instrument at any point in time. These limits were aimed at balancing usability for small-value transactions while ensuring security and risk mitigation.
In alignment with the RBI’s Statement on Developmental and Regulatory Policies, dated October 9, 2024, enhancements have been announced specifically for the UPI Lite payment system. The new amendments to the framework increase the transaction limits for UPI Lite to ₹1,000 per transaction, with an overall limit of ₹5,000 for a payment instrument at any given time. This adjustment is expected to improve the utility of UPI Lite for users, especially in areas with limited or no internet connectivity, and facilitate wider adoption of offline digital payments.
The circular issuing this amendment draws its authority from Section 18, read in conjunction with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). These provisions empower the RBI to regulate and promote the safety, efficiency, and accessibility of payment systems in India. The changes are effective immediately.
This amendment is a part of the RBI’s continuous efforts to expand digital payment adoption and enhance user experience. By increasing the transaction and cumulative limits for UPI Lite, the framework aims to provide greater convenience for users making frequent small-value payments. Additionally, the changes are likely to benefit segments such as retail, transportation, and local services, where low-value transactions dominate.
The revised framework reflects the RBI’s commitment to fostering a secure and inclusive digital payment ecosystem. These changes are expected to encourage further innovation in offline payment solutions, promoting financial inclusion in areas with connectivity challenges. As the framework evolves, it will likely play a pivotal role in achieving the RBI’s broader objectives of a digitally empowered and cashless economy.
