RBI to enhance Transaction Limit of Digital Payments; says RBI Governor

The Reserve Bank of India (RBI) Governor Shaktikanta Das, in his statement issued on 10th August 2023 has informed that the RBI is to enhance the transaction limit for small value digital payments in off-line mode from ₹200 to ₹500 within the overall limit of ₹2000 per payment instrument.

With the objective of harnessing new technologies for enhancing the digital payments experience for users, it is proposed to enable “Conversational Payments” on UPI, which will enable users to engage in conversation with AI-powered systems to make payments and also introduce offline payments on UPI using Near Field Communication (NFC) technology through ‘UPI-Lite’ on-device wallet.

The Governor stated that “Our economy has continued to grow at a reasonable pace, becoming the fifth largest economy in the world1 and contributing around 15 per cent to global growth.”

The Monetary Policy Committee (MPC) met on 8th, 9th and 10th August 2023. After detailed deliberation on all relevant aspects, it decided unanimously to keep the policy repo rate unchanged at 6.50 per cent. Consequently, the standing deposit facility (SDF) rate remains at 6.25 percent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.

Shaktikanta Das mentioned that “Investment activity gained further steam on the back of government capital expenditure, rising business optimism and revival in private capex in certain key sectors.8 Continued increase in import and production of capital goods further reaffirms this trend.”

The total flow of resources to the commercial sector from banks and other sources taken together has increased by ₹7.5 lakh crore during the financial year 2023-24 so far (up to July 28) as compared with ₹5.7 lakh crore a year ago.

It was also added that the extant regulatory framework for IDFs has been revised. The key changes in the revised framework are:

1. withdrawal of the requirement to have a sponsor for the IDFs;
2. allowing IDFs to finance toll-operate transfer (ToT) projects as direct lenders;
3. permitting IDFs to raise funds through ECBs; and
4. making tripartite agreements optional for PPP projects. These changes are expected to further augment the capacity for infrastructure financing in the country.

The RBI Governor stated that It is proposed to put in place a transparent framework for reset of interest rates on floating interest loans. It was also ensured that these will protect the consumers.  The framework will require Regulated Entities to:

1. clearly communicate with borrowers for resetting the tenor and/or EMI;
2. provide options for switching to fixed rate loans or foreclosure of loans;
3. disclose various charges incidental to the exercise of the options; and
4. ensure proper communication of key information to borrowers.

While concluding his statement the governor added that “I reiterate our commitment to align CPI inflation to the 4 per cent target on a durable basis. We do look through idiosyncratic shocks, but if such idiosyncrasies show signs of persistence, we have to act. As we prepare to celebrate Independence Day, the air is filled with hope and promise. Let me end by recalling the prophetic words of Mahatma Gandhi ‘…I have no doubt that our country would rise to the greatest height among the nations of the world.’.”

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