The strategic measures will stimulate digital transactions, effectively curbing cash usage and fostering the growth of a cashless economy. There is a major boost to the cashless system
FinTech BizNews Service
Mumbai, December 8, 2023: Reserve Bank of India announced its monetary policy on Friday. Rahul Jain, CFO, NTT DATA Payment Services India, has very interesting views on the tech & digital measures tajen by the RBI
Enhancing UPI Transaction Limit for Specified Categories
The limit for various categories of UPI transactions has been reviewed from time to time. It is now proposed to enhance the UPI transaction limit for payment to hospitals and educational institutions from Rs.1 lakh to Rs.5 lakh per transaction. This will help the consumers to make UPI payments of higher amounts for education and healthcare purposes.
Rahul Jain’s Comment: The UPI has emerged as a favoured transaction avenue for digital payments. The RBI's decision to enhance the payment limit to hospitals and educational institutions from Rs.1 lakh to Rs.5 lakh per transaction constitutes a notable stride in this direction. This strategic measure will stimulate digital transactions, effectively curbing cash usage and fostering the growth of a cashless economy. By extending the payment threshold, the RBI is fostering an environment conducive to seamless financial interactions, ultimately contributing to the transformative journey towards a digitally empowered nation. It will also further boost consumer confidence as far as critical payments are concerned and with UPI on Credit Cards gaining momentum, it's important to enhance this limit.
e-Mandates for recurring online transactions, Enhancement of limit for specified categories
e-Mandates for making payments of recurring nature have become popular among customers. Under this framework, an additional factor of authentication (AFA) is currently required for recurring transactions exceeding Rs.15,000. It is now proposed to enhance this limit to ?1 lakh per transaction for recurring payments of mutual fund subscriptions, insurance premium subscriptions and credit card repayments. This measure will further accelerate the usage of e-mandates.
Rahul Jain’s Comment: The Central Bank’s announcement on e-Mandates for recurring online transactions and enhancing the limit for certain categories will give a major boost to the cashless system. This also means more benefits to consumers in terms of security, ease of making payments, accessible digital payment. With an additional factor of authentication (AFA) and increasing the limit to Rs.1 lakh per transaction especially for mutual fund, insurance premium subscriptions and credit card repayments will further give push to consumer confidence and the usage of e-mandates.
Setting up of Fintech Repository
Financial entities like banks and NBFCs in India are increasingly partnering with Fintechs. For better understanding of developments in the Fintech ecosystem and to support this sector, it is proposed to set-up a Fintech Repository. This will be operationalised by the Reserve Bank Innovation Hub in April 2024 or earlier. FinTechs would be encouraged to provide relevant information voluntarily to this Repository.
Rahul Jain’s Comment: RBI's recent decision to establish a Fintech Repository is a positive and welcome move in the ever-changing digital landscape. The repository will ensure a robust and resilient FinTech sector by promoting best practices, products, technology stack, and financial information. While we wait for further guidelines, providing important information to the repository voluntarily can help in designing appropriate policy approaches. Regulators and stakeholders need to have relevant and timely information about FinTech entities, including the nature of their activities. Today, FinTechs are utilizing emerging technologies like Distributed Ledger Technology (DLT), Artificial Intelligence/Machine Learning (AI/ML), etc., for better ecosystem tracking.
