Banks told to audit UPI systems, follow new API usage norms amid outages: NPCI circular

The National Payments Corporation of India (NPCI) has issued a set of guidelines to prevent overuse and misuse of key non-financial APIs by payment service providers (PSP) and acquiring banks.

The NPCI, in a circular dated April 26, flagged excessive and repetitive invocation of 'check transaction status' API at high transactions per second (TPS) by some PSP banks, which it said had adversely impacted UPI system stability in recent weeks.

The directive comes against the backdrop of three major UPI outages reported in the last month—on March 26, April 2, and most recently on April 12—causing widespread transaction failures for users across the country.

The NPCI has now mandated that the first "check transaction status" request be sent only after 90 seconds of the original transaction, with a maximum of three such calls allowed within a two-hour window. In cases where errors persist, banks are required to rely on settlement files or the UDIR (Unified Dispute and Issue Resolution) system instead of repeatedly pinging the UPI backend.

“Banks must avoid batch processing of non-financial APIs and refrain from generating high TPS through file conversions,” the circular said, adding that further requests after known error codes must be stopped.

The NPCI has directed all PSPs and acquiring banks to undergo immediate audits by Cert-In empanelled firms and conduct annual reviews of API usage going forward.

NPCI also hinted at the possible implementation of rate limiters on certain APIs, in consultation with its steering committee, to avoid systemic stress.

The finance ministry, too, has taken note of the recurring disruptions.

Finance Minister Nirmala Sitharaman, in a review meeting on Monday, urged all stakeholders to work collaboratively to address infrastructure gaps and improve the end-user experience.

She also called on the NPCI to aim for one billion UPI transactions per day within the next 2–3 years and to accelerate internationalisation through interoperable payment frameworks.

“FM Smt. @nsitharaman urged all stakeholders to work collaboratively to address infrastructure gaps… and directed @NPCI_NPCI to reinforce UPI’s robustness and prevent future disruptions,” the Ministry said in a post on X.

The UPI system has grown at a CAGR of 72% from FY20 to FY25. In FY25 alone, the platform processed over 18,586 crore transactions worth Rs 261 lakh crore, representing a volume growth of 42% and value growth of 30%.

According to NPCI, 26 crore new users and 5.5 crore merchants were onboarded between FY22 and FY25, taking the platform’s annual active user base to around 45 crore.