[Analysis] RBI’s New Proposals – Boosting Financial Security | Efficiency | Innovation

The RBI proposals include revising bulk deposit limits for SCBs and SFBs to Rs 3 crore and setting the limit for Local Area Banks at Rs 1 crore, simplifying export and import guidelines to streamline operational procedures, and creating a Digital Payments Intelligence Platform to enhance security and reduce fraud. Additionally, the RBI plans to expand the e-mandate framework to include non-fixed periodicity payments like Fastag and NCMC top-ups, introduce automatic replenishment, and exempt these payments from pre-debit notification requirements. The UPI Lite wallet will also have an auto-replenishment facility when balances fall below a specified threshold. Lastly, the RBI will launch the global hackathon HaRBInger 2024, focusing on 'Zero Financial Frauds' and 'Being Divyang Friendly' to promote innovation.

Table of Contents

1. Introduction
2. Revised Bulk Deposits Limit
3. Simplifying Export and Import Guidelines
4. Digital Payments Intelligence Platform to Mitigate Payment Fraud Risks
5. Expansion of e-Mandate Framework for Recurring Payments
6. UPI Lite Wallet Auto-Replenishment Facility
7. Launching of RBI’s Global Hackathon – HaRBInger 2024
8. Conclusion

1. Introduction

On June 7, 2024, the Reserve Bank of India (RBI) unveiled a series of developmental and regulatory policy proposals to enhance India’s financial ecosystem’s security, efficiency, and inclusivity. This initiative, detailed in Press Release no. 2024-2025/454, focuses on two main areas: Regulations and Payment Systems and FinTech. The proposals include revising bulk deposit limits, rationalizing export and import guidelines, and setting up a Digital Payments Intelligence Platform to combat payment fraud. Here, we break down these key proposals and their potential impact.

2. Revised Bulk Deposits Limit

To streamline financial operations, the RBI plans to revise the definition of bulk deposits for Scheduled Commercial Banks (SCBs) and Small Finance Banks (SFBs). The current threshold for bulk deposits is set at single rupee term deposits of Rs 2 crore and above. The proposed revision will raise this limit to Rs 3 crore for SCBs and SFBs. Additionally, for local area banks, the bulk deposit limit will be set at Rs 1 crore, which will be aligned with the limit for regional rural banks (RRBs).

3. Simplifying Export and Import Guidelines

The RBI aims to rationalize existing guidelines for exporting and importing goods and services to keep up with the evolving dynamics of global trade. This simplification is expected to streamline operational procedures, promoting ease of doing business for all stakeholders involved in cross-border transactions. The draft regulations and directions will be available on the RBI’s website by the end of June 2024 for public feedback before finalization.

4. Digital Payments Intelligence Platform to Mitigate Payment Fraud Risks

To strengthen the security of digital payments and reduce fraud, the RBI has proposed creating a Digital Payments Intelligence Platform. This platform will leverage advanced technologies to provide network-level intelligence and real-time data sharing across payment systems. A committee has been established to explore the various aspects of this initiative, with recommendations expected within two months.

5. Expansion of e-Mandate Framework for Recurring Payments

The RBI’s framework for processing e-Mandates for recurring transactions, issued on January 10, 2020, currently enables recurring payments with fixed periodicity, such as daily, weekly, and monthly. The following enhancements are proposed:

5.1 Inclusion of Recurring Payments Without Fixed Periodicity

Payments such as Fastag and National Common Mobility Card (NCMC) top-ups, which recur without a fixed schedule, will be included in the e-mandate framework.

5.2 Introduction of Automatic Replenishment Facility

Under the e-mandate framework, it is proposed that an automatic replenishment facility for such payments be introduced. Automatic replenishment will be triggered when the balance in Fastag or NCMC falls below the threshold set by the customer.

5.3 Exemption from Pre-Debit Notification Requirement

The current e-mandate framework requires a pre-debit notification at least 24 hours before the actual debit from the customer’s account. It is now proposed that this requirement for automatic replenishment payments be exempted under the e-mandate framework.

6. UPI Lite Wallet Auto-Replenishment Facility

Currently, the UPI Lite facility allows a customer to load his UPI Lite wallet up to Rs. 2000/- and make payments up to Rs 500/- from the wallet. The UPI Lite facility will automatically load the wallet when the balance falls below a specified threshold, removing the need for additional authentication or pre-debit notifications. This aims to enhance user convenience and streamline digital payments.

7. Launching of RBI’s Global Hackathon – HaRBInger 2024

The RBI has continuously worked towards ensuring trust, safety, security, and inclusivity in the financial system, focusing on inclusive access and minimizing fraud. Technology has opened up effective possibilities for identifying and preventing financial fraud and widening the reach of financial services, thereby ensuring equitable access to financial products and services.

The Bank has encouraged innovation in identified focus areas through its annual Hackathons. The third edition of the global hackathon, “HaRBInger 2024, an Innovation for Transformation,” will be launched with two overarching themes: ‘Zero Financial Frauds’ and ‘Being Divyang Friendly.’

8. Conclusion

RBI’s new proposals aim to enhance security, streamline operations, and promote inclusivity in India’s financial services. The RBI addresses current challenges and fosters a safer financial environment by revising bulk deposit limits, simplifying export and import guidelines, and setting up a Digital Payments Intelligence Platform. The enhancements to the e-mandate framework and the introduction of auto-replenishment for UPI Lite wallets aim to improve the digital payment experience. At the same time, the global hackathon promotes innovation and inclusivity.