RBI increased UPI limit for Tax Payment from Rs.1 lakh to Rs 5 lakh Per Transaction

The Reserve Bank of India (RBI) has increased the tax payment limit using UPI from Rs.1 lakh to Rs.5 lakh.

While maintaining the repo rate at 6.5%, Governor Shaktikanta Das also announced other critical initiatives to boost the digital lending ecosystem, including the establishment of a public repository under a regulated company.

Accurate credit information is essential and lenders are now required to provide it to Credit Information Companies (CIC) on a fortnightly basis, giving borrowers speedier access to their credit information.

In addition, the cheque-clearing cycle will be cut from two working days to a few hours, considerably speeding up the procedure. The central bank has maintained its benchmark interest rate steady for the ninth consecutive policy meeting, despite inflation exceeding its objective.

Four out of six members of the monetary policy committee decided to keep the benchmark repurchase rate at 6.5%, as expected by everybody. The committee, whose tenure ends in October, also decided to maintain its somewhat hawkish position of “withdrawal of accommodation.”

In June, inflation reached 5.08%, much more than the Reserve Bank of India’s objective of 4%. The rise in food costs has complicated the timing of future rate cuts, with Das cautioning against premature reductions.

“Food inflation remains stubborn,” Das stated during a live-streamed address from Mumbai. High growth cannot be sustained unless prices remain stable. Monetary policy must remain disinflationary.

Following the decision, India’s bond prices plummeted, with the 10-year yield jumping by 2 basis points to 6.88%. The rupee stayed steady, but the benchmark NSE Nifty 50 Index dropped as much as 0.7%.

This decision comes at a time when global markets are experiencing tremendous volatility, owing to recent central bank initiatives in major economies. Last week, the Bank of England decreased interest rates, and there is growing pressure on the Federal Reserve to begin decreasing rates to help the economy.