RBI Proposes ‘Delegated Payments’ UPI Transaction Without Linked UPI Bank Account

The Reserve Bank of India (RBI) today proposed the setting up of a facility of ‘Delegated Payments’ under the Unified Payments Interface (UPI) for the ease of users. This facility, according to RBI Governor Shaktikanta Das would enable a user to allow another individual to make UPI transactions under a certain limit.

The Reserve Bank held its third bi-monthly Monetary Policy Committee (MPC) Meeting today, August 8 for FY25. The MPC members held discussions from August 6 to 8 on matters of economic development.

RBI governor Shaktikanta Das announced the MPC’s decision to keep the benchmark repo rate unchanged at 6.5 per cent while also maintaining the Reserve Banks’s policy stance of ‘withdrawal of accommodation’.

Delegated Payments via UPI: What it means?

"Delegated Payments" is a proposed feature that will allow a primary user to authorise another individual (secondary user) to conduct UPI transactions on the primary user's bank account.

According to Das, this feature would allow an individual (primary user) to set a ‘UPI transaction limit’ for another individual (secondary user) on the primary user’s bank account.

Says Mehul Mistry, Global Head-Strategy, Digital Financial Services & Partnerships, Wibmo, a PayU Company, “This (delgated payments facility) would minimise the gap in the current payment ecosystem prevailing in India, where cash is used predominantly to execute delegated payments. Target market segments are minors, service employees, parents, spouses, small and medium business owners, etc.”

How do delegated payments work?

In the case of delegated payments, Mistry states, primary users can provide two types of delegation to secondary users:

Full Delegation: The primary account holder fully authorises a secondary user to make UPI transactions and define spend limits by providing 2FA.

Partial Delegation: In the case of partial delegation, the primary user authorises payment requests from secondary users for completing UPI transactions with 2FA.

To put it simply, the primary user will set specific transaction limits for the secondary user, enabling controlled and secure access to their bank account for making payments. The benefit of this feature is that the secondary user does not need to have a UPI-linked bank account.

This facility is expected to further the reach and usage of digital payments across the country. It aims to make digital transactions more accessible to a broader audience.

Currently, the UPI facility has a very large user base of 424 million individuals. “There is, however, potential for further expansion of the user base,” RBI Governor Das stated in his address.

Says Rahul Jain – CFO, NTT DATA Payment Services India, “Allowing Delegated Payments can be a pivotal step in expanding the userbase of Unified Payments Interface (UPI). Through this development, two family members can now use one bank account for making UPI payments.”

Jain says, that while we wait for more details, this initiative will further strengthen and enhance UPI payments, especially in rural areas, where financial literacy is less, and one bank account is used by one family.

In addition to this, the Reserve Bank has also announced an increase in the transaction limit for tax payments through UPI up to Rs 5 lakh. As of now, the transaction limit for UPI is Rs 1 lakh, excluding certain categories of payments which require a higher transaction limit.