RBI’s Proposed 1-Hour Delay on UPI-Type Transfers Above ₹10,000
Why in the news
Banks have largely welcomed the RBI’s idea of holding back high-value digital transfers for an hour, though they think ₹10,000 is too low a trigger. The payments industry has raised practical objections of its own.
Key facts
- Proposal made in an RBI discussion paper released in April on curbing digital payment fraud.
- Core idea: a one-hour lag before funds from account-to-account transfers above ₹10,000 reach the beneficiary; the scope is peer-to-peer (P2P) transfers.
- Stakeholder comments were due by May 8.
- Banks want the limit lifted to ₹25,000, saying ₹10,000 is too low as everyday small payments go digital.
- The Self-Regulated Payment System Operators Association (SRPSOA) has also filed feedback.
Fraud numbers behind the move
| Indicator | Figure |
|---|---|
| Fraud cases above ₹10,000, by volume | About 45% |
| Fraud cases above ₹10,000, by value | About 98.5% |
| Growth in fraud value over five years | 41 times |
| Total digital payment fraud value | Nearly ₹23,000 crore |
Other proposals in the paper
- Extra authentication by a trusted person for vulnerable users such as senior citizens and first-time digital users.
- Closer checks on accounts getting big credits, to spot mule accounts.
- More customer-controlled safeguards, such as personal limits and alerts.
- A ₹25 lakh annual cap on total credits into an account; banks call it unworkable.
Concerns raised by industry
- With only P2P covered, peer-to-merchant (P2M) flows may become the next target for scams.
- Delayed payments, account whitelisting and onboarding add friction.
- A system built to be instant may turn slow and inconvenient for honest users.
Background
- P2P versus P2M: P2P moves money between two individuals with only basic KYC checks on the recipient; P2M pays registered merchants who were vetted at onboarding, so risk is lower. This is why the paper targets P2P.
- A cooling-off window lets victims reverse a fraudulent transfer and gives banks time to flag mule behaviour. Banks already delay transfers to newly added beneficiaries; the idea extends this to all large P2P transfers.
- A mule account is used by criminals to receive and move fraud proceeds, either opened with stolen identities or rented from unsuspecting holders. The RBI’s MuleHunter.AI detects them from transaction patterns.
- Related steps: CBI’s ‘Abhay’ helpbot against digital arrest scams, the National Cybercrime Reporting Portal with the 1930 helpline, and tighter KYC and video-KYC norms.
- Under the Payment and Settlement Systems Act, 2007 the RBI oversees payment system operators; NPCI (incorporated 2008) runs UPI, IMPS, RuPay, NACH, AePS, NETC FASTag and BBPS.
- SRPSOA is the self-regulatory body for payment system operators, including payment aggregators, prepaid issuers and third-party UPI apps.
Significance
- It reflects the trade-off between instant convenience and security, as fraud at this scale dents public trust.
- It signals a shift after a decade of speed-first design towards safer payments.
Exam angle
- Proposed delay: 1 hour above ₹10,000 (banks’ ask: ₹25,000).
- Related terms: P2P, P2M, mule account, SRO, whitelisting.
- Regulator: RBI, under the PSS Act, 2007; UPI is run by NPCI.