Overview
On 9th April 2026, RBI has released a discussion paper proposing four structural safeguards. These proposals are not live yet but they signal exactly where India's digital payments system is heading.
What is RBI's 2026 UPI Discussion Paper?
The RBI is proposing four major changes to UPI transaction rules to stop digital payment fraud. The four proposals are:
- 1-hour lag credit for P2P transfers above Rs 10,000,
- trusted-person authentication system for senior citizens and persons with disabilities,
- Rs 25 lakh annual ceiling on UPI credits to curb mule accounts, and
- Kill Switch to instantly disable UPI.
RBI's 1-Hour Lag Credit Feature for Transaction Reversal
How Does RBI's 1-Hour Lag Credit Works?
To address fraud transactions RBI proposes a "lag credit" feature. This introduces a 1-hour delay before funds credit to the recipient's account, allowing the sender to cancel the transaction within that window.
Key Features
- This applies to person-to-person (P2P) if transfer is more than Rs 10,000.
- Sender's account will be debited instantly, but credit to the recipient will be on hold up to 1 hour.
- If it was a mistake or scam you have chance to cancel it within 1 hour.
Trusted Person Authentication for Senior Citizens and Persons With Disabilities
UPI users those who are aged 70 years and above, physically weak or disabled individuals are frequent UPI scam targets. RBI proposes a "trusted person" feature requiring secondary authentication for their transactions.
How Does the Trusted Person System Work?
Users can create second layer of human verification (trusted person) which will require approval from the trusted person before it is processed if transaction is above Rs 50,000.
How To Change or Remove Your Trusted Person under this new RBI Rule?
You can change or remove your Trusted Person under this new RBI Rule but not instantly as a 24-hour cooling period is enforced to prevent unauthorized alterations.
Mule Account Control - The Rs 25 Lakh Annual UPI Receipt Ceiling
What Is a Mule Account?
Mule accounts are bank accounts that are used by fraudsters to receive and rapidly transfer stolen money, making it harder for authorities to trace funds. RBI proposes a Rs 25 lakh annual receiving limit per financial year via UPI.
How Will the Rs 25 Lakh Ceiling Work?
If someone receives more than Rs 25 lakh in UPI credits in a single financial year, the excess amount will be held as a "shadow credit", it will be visible on screen but not accessible. The account holder then has 30 days to complete re-KYC and justify the inflow. If they fail to do so, the extra money amount is automatically reversed to the sender.
Kill Switch for UPI
The Kill Switch in UPI apps is an emergency feature that users can instantly disable all digital payment channels such as UPI, IMPS, and net banking with a single tap. Once activated, no one, including you, can transact through your account digitally until it is reactivated.
How Do You Reactivate After Using the Kill Switch?
Reactivation will not be instant. It will require re-verification, and in many cases a physical visit to your bank branch.
Conclusion
All these four proposals are recently in the public discussion or draft phase. The RBI has invited public feedback until 8 May 2026. Final rules will only be binding once officially notified by RBI.
FAQs
Q1: Are RBI's new UPI rules already in effect in 2026?
No. RBI's new UPI rules are proposals in a discussion paper released on April 9, 2026. They are not yet final rules.
Q2: Will the 1-hour UPI lag apply to merchant payments?
No. The 1-hour lag credit applies only to person-to-person (P2P) transfers is more than Rs 10,000. Merchant payments via QR code and recurring payments are fully exempt.
Q3: Who needs to appoint a trusted person under the new UPI rules?
Senior citizens aged 70 or 75 and above, and persons with physical disabilities, will have the right to nominate a trusted person such as a child or family member to approve UPI transfers above Rs 50,000.
CAclubindia
