11:04:31 AM IST, 08 Aug 2024
RBI MPC 2024 Live Updates: RBI Announces New Measures for Digital Lending and Payment Systems
RBI Monetary Policy Live Updates: The Reserve Bank of India (RBI) is introducing significant measures aimed at enhancing customer protection, transparency, and efficiency in digital lending and payment systems.
1. Public Repository of Digital Lending Apps
To combat the challenges posed by unauthorized digital lending apps, the RBI is creating a public repository of Digital Lending Apps (DLAs) associated with RBI-regulated entities. This initiative comes after the release of guidelines on September 2, 2022, which addressed customer protection, data privacy, interest rates, recovery practices, and mis-selling concerns. Despite these measures, reports of unregulated players claiming false association with RBI-regulated entities have persisted. The repository will allow customers to verify the legitimacy of DLAs, based on data submitted directly by the regulated entities. The repository will be available on the RBI's website and updated as entities report new or deleted apps. Detailed instructions will be issued soon.
2. Increased Frequency of Credit Information Reporting
Currently, credit institutions report borrower information to credit information companies (CICs) on a monthly basis. To offer a more up-to-date picture of a borrower's credit status, the RBI has decided to increase the reporting frequency to fortnightly intervals or shorter, as mutually agreed upon by credit institutions and CICs. This change will benefit borrowers through faster updates of their credit information, especially after loan repayments, and will aid lenders in better risk assessment and in reducing borrower over-leveraging. Necessary instructions will be forthcoming.
II. Payment Systems Enhancements
3. Increased UPI Transaction Limit for Tax Payments
Unified Payments Interface (UPI) has become a preferred payment method due to its ease of use. Currently, UPI transactions are capped at ₹1 lakh. The RBI has decided to raise the limit for tax payments via UPI to ₹5 lakh per transaction. This increase aims to accommodate the regular and high-value nature of direct and indirect tax payments. Detailed instructions will follow separately.
4. Introduction of Delegated Payments via UPI
With 424 million UPI users, the RBI sees potential for further user base expansion. The RBI proposes the introduction of "Delegated Payments", allowing a primary user to set a UPI transaction limit for a secondary user on the primary user's bank account. This feature is expected to broaden digital payment use across the country. Detailed instructions will be issued soon.
5. Continuous Cheque Clearing under Cheque Truncation System (CTS)
The current Cheque Truncation System (CTS) processes cheques within a clearing cycle of up to two working days. To enhance efficiency and customer experience, the RBI proposes transitioning CTS to continuous clearing with 'on-realisation-settlement.' Cheques will be scanned, presented, and cleared within a few hours on a continuous basis during business hours, reducing the clearing cycle from T+1 days to just a few hours. Detailed guidelines will be provided shortly.
These measures are part of the RBI’s ongoing efforts to strengthen the financial system and protect consumer interests.