RBI Raises Outstanding Deposit Limits In Wallets, Payments Banks To Rs 2 Lakh
Shaktikanta Das, governor of the Reserve Bank of India (RBI), reacts during a news conference in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

RBI Raises Outstanding Deposit Limits In Wallets, Payments Banks To Rs 2 Lakh

The Reserve Bank of India raised the outstanding deposit limits in wallets and payments banks, in a move to aid financial inclusion and expand the ability of such lenders to cater to the growing needs of their customers.

Customers will be allowed to hold balances up to Rs 2 lakh in their payments bank accounts against the current limit of Rs 1 lakh, Shaktikanta Das, governor at the nation’s central bank, said during a media briefing after the Monetary Policy Committee announced its policy decision. The enhancement of end-of-day deposit limit, Das said, will be applicable immediately.

Payments banks are a form of differentiated banking services licensed by the RBI.

Also read: RBI Monetary Policy: MPC Keeps Interest Rates On Hold 

The central bank will also make it mandatory for prepaid payment instrument issuers that are fully compliant with know your customer norms to be fully interoperable with other payments acceptance infrastructure, Das said. That will enhance interoperability between payment instruments, which is currently not at a satisfactory level.

To incentivise PPI issuers to migrate to full KYC compliance, the central bank will also allow customer balances up to Rs 2 lakh for such instruments. Currently, a customer with a fully KYC-compliant PPI can hold up to Rs 1 lakh worth balance in the instrument.

“The industry was asking for a higher deposit limit from the regulator. However, directionally this shows that the RBI is becoming more comfortable with allowing payments banks and PPI issuers to hold higher customer deposits. It is definitely a big positive for payments banks as well as their customers,” said Rishi Gupta, managing director and chief executive officer at Fino Payments Bank.

The RBI will also allow cash withdrawals from fully KYC-compliant PPIs issued by non-banks. Under the current norms, only KYC-compliant PPIs issued by banks are allowed to facilitate cash withdrawals for customers.

“This measure, in conjunction with the mandate for interoperability, will boost migration to full-KYC PPIs and will also complement the acceptance infrastructure in tier III-VI centres,” Das said.

The banking regulator will release detailed regulations with respect to PPI issuers, which will give adequate time for transition to an interoperable, fully KYC-compliant system, he said.

Also read: RBI Jumps Deeper Into Yield Management With G-SAP

Other Regulatory Measures

As part of its regulatory measures, the RBI also announced certain extensions of existing schemes and fresh steps for the broader financial system.

  • To extend deadline for on-tap targeted long-term repo operations to Sept. 30, 2021 from March 31, 2021. This is to increase focus on liquidity measures on revival of activity in specific sectors.
  • To provide Rs 50,000 crore worth liquidity support facility to All India Financial Institutions in 2021-22. Of this, Rs 25,000 crore will be provided to Nabard, Rs 10,000 crore to National Housing Bank and Rs 15,000 crore to Sidbi.
  • To create a committee to undertake a comprehensive review of working of asset reconstruction companies and recommend measures to enable these entities to meet the growing requirements of the financial sector.
  • To allow priority sector status for bank lending to non-banking finance companies for on-lending to agriculture, small and medium enterprises and housing till Sept. 30, 2021. Earlier such loans could be recognised under priority sector lending up to March 31, 2021.
  • To enhance farm credit to individual farmers, priority sector loan limit to be enhanced to Rs 75 lakh from Rs 50 lakh before. Loan limit increase to be made against pledge or hypothecation of agricultural produce backed by negotiable warehouse receipts as well electronic negotiable warehouse receipts issued by warehouses registered with the Warehousing Development and Regulatory Authority.
  • To publish financial inclusion index in July of every year for the financial year ending previous March
  • To allow entities such as PPIs, card networks, white label ATM operators and TReDs platforms regulated by the RBI, membership in national electronic fund transfer and real time gross settlement system.
  • To enhance aggregate ways and means advances of state governments and union territories to Rs 47,010 crore, an increase of 46%. Further, the RBI will continue the enhanced interim WMA limit of Rs 51,560 crore up to Sept. 30, 2021. Enhanced interim WMA limit was provided in the wake of the Covid-19 pandemic.
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