NPCI proposes UPI-based cash withdrawals with ₹10,000 cap at BC outlets

People may soon be able to withdraw cash using the Unified Payments Interface (UPI) at more than two million business correspondent (BC) outlets across India, The Economic Times reported on Monday. The National Payments Corporation of India (NPCI) has reportedly approached the Reserve Bank of India (RBI) for approval to expand the facility.

At present, UPI-based withdrawals are available only at select ATMs and a limited set of merchants. The current cap is ₹1,000 per transaction in towns and cities and ₹2,000 in rural areas. Under the proposed plan, BCs will be able to disburse up to ₹10,000 per transaction, the report said.

What are business correspondents (BCs)?

Business correspondents are local agents who provide basic banking services in areas with limited branch and ATM presence. BCs can be shopkeepers, non-profits, or even individuals.

Customers already use them to withdraw cash through debit cards or Aadhaar-based biometric authentication. If UPI-based QR codes are introduced, customers would scan the code using any UPI app on their phones, authorise the debit, and collect cash from the BC.

Convenience vs security

The new system could benefit customers who face difficulties with fingerprint authentication or are wary of using physical debit cards. However, concerns have also been raised over security. In past cases, BCs have been caught in the trail of stolen or laundered money routed through multiple accounts.

Since UPI withdrawals would not require the account holder’s physical presence, experts have warned that the risk of misuse could rise.

Govt targets 1 billion daily UPI transactions

UPI now accounts for about 85 per cent of all digital payments in India and nearly half of global real-time digital transactions. On August 2, daily transactions crossed 707 million, the highest ever recorded. In July, the platform processed 19.5 billion transactions worth over ₹25 trillion.

For now, the UPI-based cash withdrawal proposal is at the planning stage, with NPCI awaiting RBI’s decision.

The government has set a target of one billion daily transactions, which NPCI expects to achieve next year at the current pace of growth.