UPI limit for IPO, govt bonds hiked to Rs 5 lakh; how it will impact investors

According to Vijay Singhania, Chairman at TradeSmart, this is an important step in widening the primary market investor base.

“Till date, the facility was available mainly to retail investors, who are categorized as those who invest up to Rs 2 lakh in an IPO. By increasing the limit, the market is now open to High Net Worth Individuals (HNIs). National Payments Corporation of India (NPCI), the umbrella organization for retail payments, recently reported that over 7.6 million mandates were created in November compared with just 1.14 million in the preceding month. RBI's move will help increase these numbers further,” Singhania said.

Notably, UPI has become the largest retail payment mechanism by volume in the country and has evolved into a simpler payment solution not just for retail requirements but also for regular recurring investments.

“Today, one can invest in everything from mutual funds to term and health insurance to even cryptocurrencies via UPI. The simplicity and security of UPI transactions is leading to higher adoption, and the RBI is doing its bit to support this by facilitating its use while investing in Retail Direct Scheme and IPO applications. The move reduces barriers to investing, and is expected to encourage better participation in such schemes,” said Adhil Shetty, CEO at Bankbazaar.

Echoing Shetty's views, Anand Kumar Bajaj, Founder, MD and CEO at PayNearby said that recent announcement to enhance the transaction limit for payments through UPI will further deepen the reach of digital payments in the country and make them more inclusive, catapulting us towards a less-cash economy.

It is reported that transaction limit in the UPI system was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020.