While announcing the December monetary policy, RBI on Wednesday decided to introduce the functionality of a single-block-and-multiple debit in UPI. This is expected to significantly enhance the ease of making payments in e-commerce space and towards investments in securities. RBI will release separate instructions to NPCI shortly.
In its statement on the development and regulatory policies, RBI said, UPI has features that enable the processing of mandates for recurring transactions and single-block-and-single-debit functionality.
Thereby, more than 70 lakh autopay mandates are handled every month and more than half of Initial Public Offer (IPO) applications are processed using the block feature of UPI.
Hence, RBI said that the capabilities of UPI can be enhanced to enable a customer to create a payment mandate against a merchant by blocking funds in his/her bank account for specific purposes which can be debited, whenever needed.
According to RBI, the development will be helpful for hotel bookings, the purchase of securities in the secondary capital market as also purchase of government securities using the RBI’s Retail Direct scheme, e-commerce transactions, etc.
Also, it will build a higher degree of trust in transactions as merchants will be assured of timely payments, while the funds remain in the customer’s account till the actual delivery of goods or services, it said.
Therefore, RBI said, “decided to introduce a single-block-and-multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities. Separate instructions to NPCI will be issued shortly.
Unified Payments Interface (UPI) has emerged as a popular retail payments system for Person to Person (P2P) and Person to Merchant (P2M) transactions.
Also, RBI has decided to expand the scope of BBPS to include all categories of payments and collections, both recurring and non-recurring in nature. This will make the platform accessible to a wider set of individuals and businesses who can benefit from the transparent and uniform payments experience, faster access to funds, and improved efficiency.
RBI increased the repo rate by 35 basis points to 6.25% in December policy — taking the key rate highest level since August 2018. With that, the repo rate has been hiked by 225 basis points so far in FY23.
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