UPI Lite Users Will Soon Be Able to Transfer Funds Back to Bank Account

UPI Lite is a digital payments feature introduced by the National Payments Corporation of India (NPCI) in September 2022 to boost small-value transactions without requiring a UPI PIN. It allows users to make instant payments of up to ₹500 per transaction, with a total wallet balance limit of ₹2,000, directly from their bank-linked UPI app.

Users of UPI Lite will soon be able to transfer their wallet balance back to their bank accounts without disabling the service. The NPCI  has instructed banks and UPI Lite-enabled platforms to implement this feature by March 31, 2025.

Current Limitations of UPI Lite

As of now, UPI Lite only allows users to add money to their wallets for small transactions. There is no option to withdraw funds. If users want to access their balance, they must disable UPI Lite, after which the remaining money is credited back to their bank account.

What Changes for Users?

With the new ‘transfer out’ functionality, users will be able to withdraw money from their UPI Lite balance and send it back to their linked bank account without turning off the feature. NPCI has introduced Purpose Code 46 to categorise these transactions.

Other Updates

• Reconciliation Requirements: Banks issuing UPI Lite wallets will need to maintain Lite Reference Number (LRN) balances and reconcile them daily with NPCI data.
• Security: UPI Lite-enabled apps will require users to set up an app passcode, biometric authentication, or a pattern lock at login to prevent unauthorised access.
• Deadline for Implementation: NPCI has set March 31, 2025, as the final date for all banks and payment service providers to introduce this feature. Existing UPI Lite guidelines will remain unchanged, apart from these updates.

How to Enable UPI Lite

1. Open a UPI-enabled app.
2. Select Enable UPI Lite from the options.
3. Accept the terms and conditions.
4. Enter the amount you want to add.
5. Select your linked bank account.
6. Authenticate using your UPI PIN.

Once activated, UPI Lite allows transactions under ₹500 without requiring a PIN. With the upcoming withdrawal feature, users will have more flexibility in managing their money.

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