Currently, users cannot withdraw their balances held in their UPI Lite account; however, it is going to change soon. In a circular dated February 21, 2025, the NPCI (National Payments Corporation of India) directed all its issuer banks, payment service provider (PSP) banks, and apps on which UPI Lite is live to implement and make active the “transfer out” functionality by March 31, 2025. “All members shall implement ‘Transfer Out’ functionality. It allows users to withdraw funds from their UPI LITE balance to the source bank account from which it was loaded without disabling UPI LITE. Purpose Code 46 shall be used to identify ‘Transfer Out’ transactions,” it noted.
At present, the UPI LITE functionality only runs one way, i.e., users can only load money in their UPI LITE wallets without having an option to withdraw it. In case an individual wants to withdraw balance funds from UPI LITE, they have to disable their UPI LITE account. As explained on NPCI’s website, “upon clicking the disable button on UPI LITE, the balance funds available with the bank in the LITE account shall be released to the customer’s account.”.
UPI Lite is designed to facilitate fast and seamless payments with a smaller, offline balance and doesn’t require a steady internet connection to complete transactions. Generally used for small-value transactions, UPI LITE has a per transaction limit of Rs 500 and a cumulative usage per day ceiling of Rs 4,000. At any given point in time, the maximum balance that can be made available in the UPI LITE account is Rs 2,000.
Mohit Bedi, Co-Founder & CBO of Kiwi, explains that until now, once money was added to UPI LITE, it could only be used for transactions, limiting liquidity. With this update, users will now have the ability to transfer unused UPI LITE balances back to their source bank account without disabling the feature.
Non-withdrawal of idle funds was one of the issues that UPI Lite users have been facing. However, starting April 1, 2025, UPI LITE users will be able to send back their UPI LITE balance money directly to the source account through which they had originally transferred funds to their UPI LITE account with. Explains Rahul Jain, CFO, NTT DATA Payment Services India, “Currently, a lot of people are concerned as to what happens to their UPI LITE balance if they load the same in their LITE wallet but do not use it? Using this functionality, users can move back their funds at any given point in time to their respective source bank account.“Moreover, UPI LITE is usually used for very small balances, since the limit is only Rs 2,000. At present, if people have very small balances left in their UPI LITE, they have to purposely utilize that money on UPI Lite, i.e., scan the QR for the balance, which I have in UPI Lite. With the transfer-out functionality effective April 1, 2025, people can send back this money to their account, however small the balance may be. Withdrawing cash against it from the ATM is also possible now,” adds Jain.
Mohan K, Founder of TechFini, notes that the transfer out functionality generally refers to the ability to move or withdraw funds from one system or platform to another. “In UPI Lite, this feature would allow users to transfer the balance stored in UPI Lite to their main UPI account or another bank account. The introduction of the transfer-out feature would provide users with more flexibility, as they could transfer funds back to their regular UPI accounts or linked bank accounts, offering more control over their money.”.
“It would streamline financial management, especially for those who use UPI Lite for small or quick transactions, as they could move the balance out when needed for larger transactions or if UPI Lite is no longer necessary,” he notes.
Separate transaction reference numbers
The circular further noted that “all the issuer banks live on UPI LITE shall maintain LRN (Lite Reference Number) level balances and ensure that reconciliation is carried out daily with NPCI data so that LRN balances are reconciled in sync with NPCI data on an ongoing basis.”
At present, as Jain explains, “Transactions only have a UPI reference number. Now, post March 31, 2025, all UPI LITE transactions will have an LRN, or Lite Reference Number. This will enable proper identification as to whether the customer has utilised their LITE balance, or directlight balance here, or you have utilized the UPI balance directly from a bank account. This can be tracked at the customer level, at the bank level, or at any of the PSP levels.”
Also, all UPI apps with active UPI LITE shall have an app passcode, biometrics, or pattern-based lock at the time of pp login.
