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4 Key takeaways from RBI’s new digital payment moves

By Leandra Monteiro

April 08, 2021

  • India
  • RBI
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RBI, digital payments, UPI, Payments Bank, PPIs, E-wallet, Full-KYC, RTGS The recent announcements by the Reserve Bank of India were made in line to encourage non-bank financial institutions such as mobile wallets and payments banks. The RBI has not only decided to keep the key policy rates unchanged but has also decided to make online payments through NEFT, RTGS, mobile wallets, UPI and other digital modes more convenient.

These initiatives are aimed at giving equal opportunities to non-bank payment operators and banks, while also reducing settlement risks by widening the ecosystem. Here are some of the key announcements from the RBI Monetary Policy meet on 7 April 2021 –

Deposit hiked to₹2 lakh for payments bank: In order to cater to the growing needs of customers and to boost digital payments banks, the RBI has announced that it has hiked the maximum end of day balance for payment banks to Rs 2 lakh from Rs 1 lakh earlier.

Full-KYC for PPIs : The Reserve Bank of India has proposed to make interoperability mandatory for full-KYC prepaid instruments (PPIs) and for all payment acceptance infrastructure. This move towards mandatory interoperability will increase positive customer relations and will allow customers of mobile wallets to transfer funds from one wallet to another.

Cash withdrawal from full-KYC PPIs issued by non-banks: In another move to bring uniformity, RBI has now proposed to allow cash withdrawals for full-KYC PPIs of non-bank PPI issuers. At present, cash withdrawal is allowed only for full-KYC Prepaid Payment Instruments (PPIs) issued by banks. However, to bring regularity among users, the Reserve Bank of India has proposed to allow cash withdrawals for full-KYC PPIs of non-bank PPI issuers. Going forward, users of PPIs like wallet and prepaid cards issued by non-banks would be able to withdraw cash.

Non-bank payment operators can also use RTGS and NEFT: RBI in a bid to boost online payments announced that non-banks like FinTechs and payment banks can soon offer the RTGS and NEFT facility. This facility up until now was exclusively offered by banks. Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by the Reserve Bank, can take direct membership in CPSs. This will further the idea of branchless banking and help the Indian economy go cashless.

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