The National Payments Corporation of India (NPCI) is planning to allow UPI-based cash withdrawals of up to ₹10,000 per transaction at Business Correspondent (BC) outlets across India. Currently, cash withdrawals via UPI are mostly limited to ATMs or select merchants, and the amounts in cities and towns are low (₹1,000), with slightly higher limits in rural areas (₹2,000).
To roll this out, NPCI has asked for approval from the Reserve Bank of India (RBI). If approved, customers would scan a QR code at a BC outlet with their UPI app, authorize the transaction using the UPI PIN, and receive cash from the BC.
Context & Existing Limits
- Under the UPI-ATM (Interoperable Cardless Cash Withdrawal – ICCW) scheme, cash withdrawals from ATMs using UPI (cardless, via QR, etc.) already have a per-transaction limit of ₹10,000.
- UPI withdrawals at merchants or BCs are currently much lower: typically ₹1,000 in urban areas, ₹2,000 in rural zones via merchant/BC outlets.
Why This Matters
- Financial Inclusion: Allowing withdrawals of up to ₹10,000 at BC outlets improves access to cash for people in rural or semi-urban areas who have poor ATM coverage.
- Convenience: Provides an alternative to physically going to ATMs. Especially helpful for those who prefer QR + UPI over carrying cards or using biometric authentication.
- Reduced Dependency on ATMs: ATMs have costs, outage risks, liquidity issues; BC outlets are more widespread. This move could decentralize cash access.
- Safety & Flexibility: Cardless withdrawals reduce risk of card theft or cloning; UPI PIN + QR adds authentication layer.
Challenges & Risks
- Security & Fraud Risk: Transaction authorisation via UPI and QR codes without requiring card presence may lead to misuse, especially where identity verification is weak or oversight is limited. The Economic Times
- Operational Readiness of BCs: Many BCs are small outlets; ensuring enough staff, cash availability, training, system uptime will be important.
- Regulatory Approval & Oversight: This proposal depends on RBI’s approval; also, oversight on limits, monitoring misuse, compliance will need robust frameworks.
- Potential Liquidity & Cash Management: BCs will need to manage cash reserves, reconciliation, etc., which adds complexity and cost.
What To Watch Next
- Whether RBI gives formal approval, and under what conditions (e.g. limits per day, per outlet, time/frequency restrictions).
- Details like whether the ₹10,000 limit per transaction will also come with a limit per day or restrictions based on user verification.
- Which BC outlets will be enabled first—urban vs rural, bank vs nonprofit BCs.
- How banks and UPI app providers integrate this into their apps and user flows.
- Communication to consumers about how this will work, how to safely use UPI for cash withdrawal, etc.
Conclusion
If NPCI’s proposal is approved, permitting UPI cash withdrawal up to ₹10,000 per transaction at BC outlets could mark a major step in improving cash accessibility in India, especially for underserved areas. It would leverage UPI’s popularity, strengthen financial inclusion, and reduce the dependency on ATMs. However, success will hinge on balancing convenience with strong security and ensuring BC infrastructure is ready.
