RBI Monetary Policy: Five Key Takeaways On Regulations, Payment Systems

The Reserve Bank of India announced five key regulatory measures as part of its monetary policy announcement on Wednesday. These measures include the enhancement of UPI limits, the inclusion of micro and small enterprise loans under responsible lending conduct, and a discussion paper on capital raising avenues for primary urban cooperative banks.

Banks and non-bank lenders are not allowed to levy foreclosure charges or pre-payment penalties on any floating rate term loans sanctioned to individual borrowers with or without co-obligates for purposes other than business, but the central bank has now decided to cover loans to MSEs under this regulation.

"With a view to safeguarding customers' interests through better transparency and customer centricity by lenders, it has been decided to broaden the scope of such regulations to cover loans to micro and small enterprises (MSEs) extended by the regulated entities of the Reserve Bank," Governor Das said.

It will also issue a draft circular on the same for public consultation, the statement on developmental and regulatory policies said.

Second, it plans to issue a discussion paper for primary urban cooperative banks' capital-raising avenues based on the recommendations of the working group constituted by the RBI.

The working group was introduced to further operationalise the broad-based recommendations of the expert committee chaired by former RBI Deputy Governor NS Vishwanathan on the newly enabled capital-related provisions.

This is because the previous regulation of share capital and securities for primary urban co-operative banks did not include issuance of special shares and issuance of shares at a premium.

Third, RBI proposes to create a data repository called 'the Reserve Bank - Climate Risk Information System (RB-CRIS)' to bridge the gaps of climate-related data. This will consist of two parts: a web-based directory listing various data sources, which will be publicly accessible on the RBI website, and a data portal comprising datasets.

Only regulated entities will gradually gain access to the data portal.

Fourth, it has decided to enhance the per-transaction limit of UPI123Pay to Rs 10,000 from Rs 5,000 earlier, the wallet limit of UPI Lite to Rs 5,000 from Rs 2,000 earlier, and the per-transaction limit to Rs 1,000 from Rs 500 earlier.

This has been done with an aim to further encourage wider adoption of UPI as it is becoming the most preferred payment route.

Lastly, the RBI has introduced a 'beneficiary account name lookup facility' for remitters using the Real Time Gross Settlement System and National Electronic Funds Transfer systems. This has come after several requests were made to introduce a facility where UPI and IMPIS allow the remitter to verify the name of the receiver before initiating a payment transaction.

"This facility will increase customer confidence as it will reduce the possibility of wrong credits and frauds. Detailed guidelines will be issued separately," it said.