UPI limit to be Rs 5 lakh when paying hospitals & educational institutes

e-Mandates for recurring transactions

The central bank has proposed removing the Additional Factor of Authentication (AFA) requirement for transactions up to Rs 1 lakh for the following categories: Subscription to mutual funds; payment of insurance premium; and payments of credit card bills.

The other existing requirements, such as pre- and post-transaction notifications and opt-out facility for users, shall continue to apply to these transactions.

The limits for execution of e-mandates without AFA currently stands at Rs 15,000. The number of e-mandates registered currently stands at 8.5 crore, processing transactions worth nearly Rs 2,800 crore per month. The system has stabilised, but in categories such as subscription to mutual funds, payment of insurance premium and credit card bill payments, where the transaction sizes are more than Rs 15,000, a need to enhance the limit has been expressed as adoption has been lagging, the RBI said.

Repository for fintechs

The central bank has also proposed setting up a repository for capturing essential information about fintechs, encompassing their activities, products, technology stack and financial information. This measure is aimed at getting a better understanding of the developments in the fintech ecosystem with an objective to appropriately support the sector,

On the need for a repository, the RBI said: “To ensure a resilient fintech sector and promote best practices, regulators and stakeholders need to have relevant and timely information on fintech entities, including the nature of their activities.” Fintechs are using emerging technologies like distributed ledger technology, artificial intelligence, machine learning and so on.

Liquidity framework tweak

To facilitate better fund management by banks, the RBI announced the reversal of liquidity facilities under both the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) even during weekends and holidays with effect from December 30, 2023.

Introduced in 2018, the SDF is an additional tool for absorbing liquidity without any collateral. MSF is a window which allows banks to borrow from the RBI in an emergency situation when the inter-bank liquidity dries up.

At present, the SDF and the MSF can be availed from 5:30 pm to 11:59 pm on all days including weekends and holidays. However, the reversal of the facilities – withdrawal of deposited funds for SDF and repayment of borrowed funds for MSF – for the transactions over the weekends and holidays, is available only on the next working day in Mumbai.