Shaktikanta Das, governor of the RBI, revealed a new feature for platforms using the Unified Payments Interface (UPI) that would permit multiple debits. In his remarks during the three-day Monetary Policy Committee (MPC) meeting, Mr. Das stated, “The UPI currently includes functionality to undertake recurring payments and single-block payments. It is now being enhanced to allow customers to block funds in their accounts for multiple payments of specific nature.”
This should make investing in securities and making payments for online purchases easier. Users will be able to block monies in their accounts using the single-block and multiple debits feature that the RBI will introduce.
Users can currently set up recurring payments using the UPI AutoPay feature; however, merchants can only process a single debit to collect money. With the new function, the merchant is able to debit several times up to the allowed limit.
The capital market regulator also plans to create a system called Application Supported by Blocked Amount (ASBA), which will block money for secondary market trades. This new functionality will be essential in creating this framework.
The functionality, according to the governor, will also be useful when buying government securities through the RBI’s retail direct scheme. He continued by saying that the National Payments Corporation of India (NPCI) will receive specific instructions on how to carry out the improvement.
Bharat Bill Payment System
Mr. Das also disclosed that the Bharat Bill Payment System (BBPS) would now cover all payments and collections.
According to Mr. Das, BBPS does not currently have the capability to handle non-recurring payments or specific collection needs, even if they are recurrent in nature. Until today, it was not possible to make one-time payments to merchants and utilities as well as recurring payments to people, such as rent to landlords, professional fees to chartered accountants, and medical bills, among other things. Now, all forms of payments will be included in this. As a result, payments for professional services, education costs, taxes, and rent are not covered by the platform.
The new method will open up the BBPS platform to a larger group of people and companies who can take advantage of the transparent and standardized payment experience, quicker fund availability, and increased efficiency. He said NPCI Bharat BillPay Ltd (NBBL) will receive separate instructions regarding this.
The National Payments Corporation of India manages BBPS, which was introduced in 2017. (NPCI).
UPI in Investments
Traditionally, investors utilize both offline and online methods to send money to their stock brokers and mutual fund houses in order to invest in stocks and mutual fund units. Even if offline techniques like checks are obsolete, elderly people and those who dislike internet banking still utilize them.
Net banking has gained traction in the online world. Many people transfer money through NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement).
One-time mandates on NACH (National Automated Clearing House) platforms have recently overtaken periodic mandates in the creation of systematic investment programs, where money is transmitted at regular intervals. E-NACH mandates that are registered using the investor’s internet banking or debit card credentials are popular since they reduce the amount of time needed for registration.
However, the UPI autopay option is now used by mutual fund companies and other stakeholders to register SIP mandates. This facility is also provided by select distributors and fund firms like Tata and IDFC.
Investors can finance their broking accounts with UPI in order to trade in equities, bonds, and exchange-traded fund units. Investors are familiar with the use of UPI to block funds for applications for initial public offerings.
Distributors like PhonePe offer gold SIPs, a scheme that enables routine investing in digital gold, using UPI autopay.
