Hello Readers!!

Last week on 7^th April 2021, the RBI (Reserve Bank Of India) reviewed its Monetary Policy and come up with three key provisions, that will make the digital payment system more choiceful to people from before.

The three key measures include:

• E-wallets are now allowed to offer Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities to their users.
• Interoperability of mobile wallets made mandatory.
• It increased the maximum balance you can hold in your mobile wallets to Rs 2 lakh, up from Rs 1 lakh allowed presently.

The prominent aim behind these provisions introduced by RBI is to connect more and more people with digital payments. Well, it will be interesting to watch how these provisions work out and how much it eases down the transaction processes through digital wallets.

Before that lets us have a brief discussion over the three key measures taken by RBI!

Send Money Directly From Your Wallet!

There is kind of restrictions towards using digital wallets, currently. Like users are allowed to transfer money from their digital wallet but only when the other person to receive money also use the same wallet that you are using. For example, a PayTm wallet holder can only send money directly to another person with a PayTm wallet.

Secondly, money in digital wallets can only be used to make online payments or purchase online something online clothes or personal care items, movie tickets, air, and rail tickets. But when it comes to paying your child’s school fees or pay rent or pay college fees, we often had to either look for cash or an ATM card.

The third restriction is transferring money from your digital wallet to your own bank account, it is clumsy to work obviously. For instance, the PhonePe app doesn’t allow the withdrawal of amounts from the wallet. Nor can funds be transferred from the wallet to your bank account. However, through digital gold, you can do it but yes the process is clumsy. First, you have to buy digital gold from money lying in your mobile wallet. Then, you sell the gold and send the money directly to your linked bank account on PhonePe.

Well, now the restrictions would be soon relieved and the user of digital wallets will be able to transfer money directly to their bank account, as now the mobile wallets would be connected with NEFT and RTGS facilities, that will give proper beneficiaries, like including your bank accounts and start sending money.

Mobile Wallets Already Allow UPI Transfer. Can One Not Just Use That?

UPI users can continue sending money to anyone using via the United Payments Interface (UPI). It is also an easy and smooth process to transfer money, which is now controlled and managed by the National Payments Corporation of India (NPCI).

Adding NEFT and RTGS to your mobile wallet will also help you send and receive money, however, there will be a difference in their work time that is NEFT works in batches, 15 to 30 minutes apart. While RTGS will send and receive money in real-time. The minimum amount that one can transfer through NEFT and RTGS is Rs 2 lakh at present.

RBI one its provisions said that they are doing this to reduce the burden of money transfers on the banking system. We have learned the importance of digital payments and their necessity especially in times of pandemic. Sunil Khosla, President Digital Business of India Transact Services says that compared to banks, the reach of digital wallets has expanded and, so, the inclusion of the RTGS and NEFT would further make customers in smaller towns take to banking.

Well, there are still many things that need to be cleared by RBI like how would a digital wallet holder be able to use the RTGS facility and many other points.

Interoperability Made Mandatory!!

Well, this is one of the efficient measures among the three-measure taken up by the RBI. Now as per RBI’s proposal, interoperability will be made mandatory for full-KYC mobile wallets. This means that now a Paytm wallet user can transfer money to another person who is using another mobile wallet say MobiKwik wallet.

This is efficient because till now people generally used more than two mobile wallets on their phones, so that they can easily transfer the money to the other person, using a similar mobile wallet. Basically, interoperability is made mandatory to ease the matter of transfer of money from one mobile wallet to another different mobile wallet.

The RBI governor, Shaktikanta Das in his speech while reviewing the monetary policy said that “Two years before, RBI mentioned the interoperability in mobile wallets not so significant. However, after researching and analyzing for long two years, we are therefore proposing to make interoperability mandatory for full-KYC PPIs and for all acceptance infrastructure.”

Keep reading for more updates on Finance and Investment related news!

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

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