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RBI Hikes UPI Transaction Limit for Vital Sectors
RBI Boosts UPI Transaction Limit for Hospitals and Educational Institutions: In a significant move, the Reserve Bank of India (RBI) has recently proposed a notable hike in the UPI transaction limit specifically catering to transactions made towards hospitals and educational institutions. This initiative aims to streamline financial transactions in these crucial sectors, marking a substantial shift in the existing transaction limits.
UPI Transaction Limit for Hospitals and Educational Institutions: Rs 1 Lakh to Rs 5 Lakhs
The RBI’s proposal includes elevating the UPI transaction limit for hospitals and educational institutions from the current Rs 1 lakh to a more substantial Rs 5 lakh per transaction. This adjustment seeks to facilitate more seamless and substantial financial transactions in these sectors, recognizing their significance in the national landscape. RBI Press Release
Expanding Horizons: Previous UPI Transaction Limit Framework
Before delving into the specific enhancements, it’s essential to understand the current landscape of UPI transaction limits. Generally capped at Rs 1 lakh, exceptions exist for certain categories like capital markets, collections, and insurance, where the transaction limit varies. Notably, in December 2021, UPI transaction limits for retail direct schemes and IPO subscriptions were increased to Rs 5 lakh.
You can read our previous article regarding UPI Transaction Limits for different banks: UPI Transaction Limit 2023: An In-depth Look at SBI, ICICI, HDFC, and Other Banks
AFA Removal Proposal: Simplifying Transactions up to Rs 1 Lakh
In a bid to simplify financial transactions, the RBI has proposed removing the Additional Factor of Authentication (AFA) requirement for transactions up to Rs 1 lakh. This applies to specific categories such as subscription to mutual funds, payment of insurance premiums, and credit card bill payments, further streamlining processes in these domains.
e-Mandates for Recurring Transactions: Navigating the Rs 15,000 Limit
The RBI has also proposed adjustments in the realm of e-mandates for recurring transactions. While the current limit without AFA stands at Rs 15,000, the need for an enhancement is acknowledged, particularly in categories with transaction sizes exceeding this threshold. The RBI’s move aims to address adoption challenges and foster smoother transactions in areas like mutual fund subscriptions, insurance premium payments, and credit card bill settlements.
Fintech Repository: Enhancing Oversight and Information Access
In a forward-looking step, the RBI has suggested the establishment of a repository to consolidate vital information about fintech entities. This repository will encompass details regarding their activities, products, technology stack, and financial information. The objective is to foster a deeper understanding of developments in the fintech ecosystem, facilitating timely regulatory support and promoting best practices.
Liquidity Framework Tweak: Improving Fund Management for Banks
To enhance fund management by banks, the RBI has announced a tweak in the liquidity framework. Effective from December 30, 2023, the reversal of liquidity facilities under the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) will now be available even during weekends and holidays. This adjustment seeks to provide more flexibility for banks in managing liquidity, ensuring smoother financial operations.
Conclusion: Charting a Course for Enhanced Financial Efficacy
The RBI’s recent proposals underscore a commitment to adapt and refine the financial landscape, particularly in critical sectors like healthcare and education. The proposed boost in UPI Transaction Limit for Hospitals and Educational Institutions, coupled with adjustments in authentication requirements and the establishment of a fintech repository, collectively represent a comprehensive effort to enhance financial efficacy and oversight in the evolving digital era. As these measures take effect, stakeholders can anticipate a more streamlined and secure financial environment, benefitting both consumers and institutions alike.
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