RBI Monetary Policy Committee Announcements: RBI Governor Shaktikanta Das on Wednesday, November 8, announced to launch digital payment systems for feature phones. This means that the central bank will allow Unified Payments Interface-based (UPI) products to be available on feature phones, and make an internet-free UPI payments system possible in the upcoming days. The RBI governor made the significant announcement during the address regarding its decisions made during the bi-monthly Monetary Policy Committee (MPC) meet that ended recently.
Shaktikanta Das proposed three measures to make UPI payments simpler for consumers across the country.
“UPI is the single largest retail payments systems in the country in terms of volume of transactions, indicating its wide acceptance — particularly for small value payments. In order to further deepen digital payments and make them more inclusive, ease transactions for consumers, facilitate greater participation of retail customers in various segments of the financial markets and enhance the capacity of service providers, it is proposed to launch UPI-based payment products for feature phone users leveraging on the Reserve Bank’s regulatory Sandbox on Retail Payments,” said Das on the day.
The RBI governor also proposed to make the process flow for small value transactions simpler. “…make the process flow for small value transactions
simpler through a mechanism of ‘on-device’ wallet in UPI applications,” he added.
The RBI has also proposed to enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh, Das noted in his statement at the MPC announcement.
“Reserve Bank has been making efforts to facilitate greater participation of retail customers in financial markets, e.g. investment in the G-secs segment through the recent launch of Retail Direct Scheme, where UPI, in addition to other options such as internet banking, can be used to make payments for participating in both the primary and secondary markets. Over time, UPI has also become a popular payment option for Initial Public Offerings (IPOs) since its availability from January 01, 20194. It is reported that IPO applications of Rs 2 to Rs 5 lakh constitute approximately 10 per cent of subscription applications. The transaction limit in the UPI was enhanced from Rs 1 lakh to Rs 2 lakh in March 2020. To further encourage the use of UPI by retail investors, it is proposed to enhance the transaction limit for payments through UPI for retail Direct Scheme and IPO applications from Rs 2 lakh to Rs 5 lakh. Separate instructions to NPCI will be issued shortly,” read the RBI’s Statement on Developmental and Regulatory Policy.