UPI outage hits transactions as year-end rush strains bank servers

A surge in UPI transactions and year-end bank closures led to a system outage, causing transaction failures, which the NPCI attributed to high volumes and financial year-end settlements at banks

A year-end rush at banks, coupled with rising volumes of India’s real-time payments system, Unified Payments Interface (UPI), led to a bank-wide outage on Tuesday, sources said.

 

Users encountered issues in processing digital payment transactions. The NPCI attributed the technical declines to financial year-end closing at the banks' end.

 

Industry players point out that there could be three reasons for this outage — internet connectivity issues, bank server overload due to capacity constraints, or technical glitches at UPI.

 

Executives Business Standard spoke to said financial institutions and banks will be required to continually invest in data centre capabilities to maintain the uptime of their IT infrastructure.

 

“Most banks are now on UPI, and transactions are going through the roof. Even if one or two banks are affected, the entire ecosystem gets impacted since banks interact with one another within the larger network,” one of the people quoted above said.

 

The outage on Tuesday followed the one on March 26, when the NPCI’s system faced intermittent issues. The issues come at a time when UPI is scaling new heights in transaction processing volumes. For the financial year 2024–25 (FY25), UPI transactions rose 30 per cent in value to Rs 260.56 trillion, up from Rs 199.96 trillion in FY24. Volume increased 42 per cent to 131.14 billion transactions compared with 92.48 billion in the previous year.

 

“Banks have to close all their previous year’s accounts and settlements. They have a cut-off time, take all the data, save the returns, among other things, which banks attribute to year-end closing,” another person added.

 

A person in the know said that the State Bank of India (SBI) faced issues in processing UPI transactions on Wednesday. An outage at the bank can affect others in the ecosystem since financial institutions interact with one another in real time to settle customer transactions.

 

“This time, the State Bank of India (SBI) had a challenge, and it is the biggest bank in the country. UPI is an ecosystem, and it moves from bank to bank,” the person said.

 

UPI transactions reached record highs in both value and volume in March 2025, clocking Rs 24.77 trillion and 19.78 billion transactions, respectively.

 

This marked a rise of 13 per cent in value and 14 per cent in volume over February, driven by a surge in year-end transactions, according to data from the NPCI.

 

This is the first time UPI value has crossed Rs 24 trillion, and transactions have surpassed 19 billion since the system became operational in April 2016. In March, UPI recorded an average daily transaction volume of 591 million. The network recorded 550 million transactions on March 26 following an outage — a 7 per cent decline from the average daily transaction volume recorded in the same month. Over 581 million transactions were recorded on the previous day.