Why in News?

In a bid to bolster the safety and security of digital payments and enhance regulatory frameworks, the Reserve Bank of India (RBI) unveiled a series of proposals in its bi-monthly Monetary Policy Statement.

The article tries to discuss various proposals of the RBI aimed at fostering innovation, inclusivity, and efficiency in the financial ecosystem.

What’s in Today’s Article?

• Establishing a Digital Payments Intelligence Platform
• Other Proposals of RBI

Establishing a Digital Payments Intelligence Platform:

• Proposal: The RBI has proposed to set up a Digital Payments Intelligence Platform which will harness advanced technologies to mitigate payment fraud risks.
• Constitution of AP Hota committee:
  • To take the initiative of setting up Digital Payments Intelligence Platform forward, the RBI has constituted a committee, under the Chairmanship of AP Hota (former MD & CEO NPCI).
  • The committee will examine various aspects of setting up a digital public infrastructure for the platform and is expected to give its recommendations within two months.
• Need for setting up Digital Payments Intelligence Platform:
  • According to RBI data, domestic payment frauds jumped by 70.64% to Rs 2,604 crore during the six-month period ended March 2024 from Rs 1,526 crore in the same period of last year.
  • The volume of frauds also rose to 15.51 lakh during the March 2024 period from 11.5 lakh in the previous six-month period.
  • The alarming increase coincides with India’s rapid transformation into a digital payments powerhouse, fuelled by the widespread adoption of the unified payments interface (UPI) since its launch in 2016.
    • UPI transactions have seen explosive growth, surging 137% in the past two years to touch ₹200-lakh crore.
  • Hence, the regulatory measures like setting up of digital payments intelligence platform will harness advanced technologies to mitigate fraud risks.

Other Proposals of RBI:

• Raising bulk deposits limit:
  • For commercial banks (excluding RRBs) and small finance banks, the RBI has proposed to revise the definition of bulk deposits as single rupee term deposits of Rs 3 crore and above from the current limit of Rs 2 crore and above.
  • For local area banks, it has proposed to define the bulk deposit limit as single rupee term deposits of Rs 1 crore and above as applicable in the case of regional rural banks (RRBs).
  • Banks have discretion to offer differential rates of interest on the bulk deposits as per their requirements and Asset-Liability Management (ALM) projections.
• Automatic e-mandate for recurring transactions:
  • The automatic replenishment will be triggered when the balance in Fastag or NCMC falls below a threshold amount set by the customer.
  • The current e-mandate framework requires a pre-debit notification at least 24-hours before the actual debit from the customer's account.
  • The RBI has proposed to exempt this requirement for payments made from customer’s account for automatic replenishment of balances in Fastag or NCMC under the e-mandate framework.
• UPI Lite within the ambit of the e-mandate framework:
  • By introducing an auto-replenishment facility for loading the UPI Lite wallet by the customer, if the balance goes below a threshold amount set by him/her.
  • The idea is to do away with the need for extra authentication or pre-debit notification because the money stays with the consumer (moving from his/her account to wallet).
  • The UPI Lite facility currently allows a customer to load his UPI Lite wallet up to Rs 2000 and make payments up to Rs 500 from the wallet.
• Rationalising existing guidelines on export and import of goods and services:
  • This will be in line with the changing dynamics of cross-border trade transactions globally and aims at simplifying operational procedures.
  • This will promote ease of doing business for all the stakeholders.