RBI allows NPCI to improve transaction ranks in UPI for P2M payments

Mumbai, April 9 (PTI) The Reserve Bank on Wednesday allowed NPCI to revise transaction borders in UPI for payments for person-to-trade (P2M) based on the developing user needs. National Payments Corporation of India (NPCI) is an umbrella organization for operating retail payments and settlements in India. UPI or Unified Payments Interface is a real -time payment system used to send and receive money between bank accounts using a mobile app. At present, the transaction amount for UPI, which covers both person to person (P2P) and person to trader payments (P2M), is limited at £ 1 lakh, except for specific use cases of P2M payments that have higher limits, some of £ 2 lakh and others at £ 5 Lakh. “To enable the ecosystem to respond effectively to cases of new use, it is suggested that NPCI, in consultation with banks and other UPI ecosystem stakeholders, be able to announce and revise such limits based on the developing user needs,” said Sanjay Malhotra, Governor of the RBI. He added that appropriate precautions are put in place to reduce risks associated with higher limits. Banks will continue to have the discretion to determine their own internal limits within the limits announced by NPCI, the governor added. However, P2P transactions on UPI will still be limited to £ 1 lakh, as so far. Governor Malhotra has announced that the RBI proposes to review the lending guidelines against gold jewelry. Loans against the collateral of gold jewelry and ornaments are expanded by regulated entities (rest) for both consumption and income generation purposes. Prudential and behavior-related regulations for these types of loans have been issued from time to time and vary for different categories of rest. “With a view to harmonizing such regulations about rest, while taking into account their risk capacity, and also addressing some concerns observed, it was decided to issue comprehensive regulations, on cautionary norms and perform related aspects, for such loans,” the governor said. The draft lines in this regard will be issued for public comments. The Reserve Bank also suggested to make the Regulatory Sandbox (RS) frame ‘theme neutral’ and ‘on tap’ to promote continuous innovation and keep track of the fast -developing FinTech/regulatory landscape. RBI has been operating the RS framework since 2019, and four specific thematic cohorts have been announced and completed to date. In October 2021, a ‘on tap’ application facility for themes of closed cohorts was announced. ‘ A fifth ‘theme of neutral’ cohort with a particular time window for receiving applications was also announced in October 2023, which will close in May 2025. Under this cohort, any innovative product or solution can be tested within the regulatory ambit of RBI if eligible. “Based on the experience gained and feedback from stakeholders, it is now proposed to make the regulatory Sandbox ‘theme neutral’ and ‘on tap’,” Malhotra said. The central bank will also issue a draft framework for the security of stressed assets. The proposed framework intends to enable securitization of stressed assets through a market-based mechanism, in addition to the existing Bow Route under the Sarfaesi Act, 2002. The existing co-lending guidelines apply only to arrangements between banks and NBFC’s for priority sector loans. “In light of the evolution of such lending practices, and the potential of such lending arrangements to provide for the credit needs of a greater segment in a sustainable way, it was decided to expand the scope for co-lending and to issue a generic regulatory framework for all forms of co-arrangements. RBI will issue a draft lines on the framework for co-lending arrangements.