RBI Introduces Single-Block-And-Multiple-Debit Functionality In UPI
Also, RBI has plans to expand the scope of Bharat Bill Payment System (BBPS) to include all categories of payments and collections, both recurring and non-recurring in nature
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On the backdrop of the December monetary policy, on Wednesday, the Reserve Bank of India (RBI) has augmented the potentialities of Unified Payments Interface (UPI) by introducing the functionality of a single-block-and-multiple-debit in UPI.
"This will significantly enhance the ease of making payments for investments in securities including through the retail direct platform as well as e-commerce transactions," said Shaktikanta Das, in a statement.
Furthermore, it allows a customer to enable a payment mandate against a merchant by blocking funds for specific purposes in his or her bank account which can be debited, whenever needed.
According to experts, as quoted in a news report, this feature will offer a push to the already burgeoning payment volumes of UPI. Currently, UPI enables mandates for recurring transactions and single-block-and-single-debit functionality.
"RBI's announcement with respect to UPI payments and Bharat Bill Payment Systems are encouraging in the payments ecosystem. The RBI's announcement around increasing that capacity of UPI by introducing single-block-and-multiple-debits functionality, will enble users to block funds in their account, which can be debited at the time of need. India, as an economy, has already witnessed a rapid rise in the digital payments, logging 23.06 billion transactions amounting INR 38.3 lakh crore in the third quarter this year. RBI's recent efforts with respect to digital payments will certainly contribute towards the cashless economy imperative," said Akash Sinha, CEO and co-founder of Cashfree Payments, while sharing the viewpoints regarding the government's role in the digital payments ecosystem.
In a statement on the development and regulatory policies, RBI said that UPI has features that enable processing of mandates for recurring transactions and single-block-and-single-debit functionality. Thereby, as per reports, more than 70 lakh autopay mandates are handled every month, and more than half of the initial public offer (IPO) applications are processed using the block feature.
RBI will reportedly issue the instructions to National Payments Corporation of India (NPCI), which runs and manages UPI, on this functionality shortly. Also, RBI has plans to expand the scope of Bharat Bill Payment System (BBPS) to include all categories of payments and collections, both recurring and non-recurring in nature.
On top of that, this feature will build a higher degree of trust in transactions as merchants will be assured of timely payments, while the funds continue in the customer's account until delivery of goods or services, as per the RBI statement.
It also added that this new functionality will play a crucial role in forming the framework for blocking money for secondary market trades, a mechanism called Application Supported by Blocked Amount (ASBA), which the capital market regulator is planning to implement.
Likewise, this is also expected to be useful in the Securities and Exchange Board of India's idea of developing an ASBA payment system for the secondary market, whereby T+1 settlement would get a boost.