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RBI to launch UPI-based feature phone products; paper on digital payment charges soon

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RBI policy: RBI will launch UPI-based payment products for feature phone users and make process flow for small value transactions simpler.

The Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said that the central bank is proposing to release a discussion paper on charges in payment systems to make digital transactions more affordable. Further, he said that RBI will launch UPI-based payment products for feature phone users and make process flow for small value transactions simpler.
"There have been some concerns on the reasonableness of various charges incurred by customers for digital payments through credit cards, debit cards, prepaid payment instruments (cards and wallets), Unified Payments Interface (UPI) and the like. It is proposed to release a discussion paper on various charges in the payment system to have a holistic view of the issues involved and possible approaches to mitigating the concerns so as to make digital transactions more affordable," Das said.
Further, he proposed to enhance limit for transactions via Retail Direct from Rs 2 lakh to Rs 5 lakh.
"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 percent of subscription applications," he said.
"The transaction limit in the UPI system 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," he added.
Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das announced that the central bank has decided to keep key rates unchanged - repo rate - at 4 percent and the stance remains accomodative. Das said the MPC voted 5:1 to maintain the 'accommodative' stance of policy for "as long as necessary to sustain and revive growth on a durable basis".
With this, it is the ninth consecutive time since the rate remains unchanged.
Das said the pandemic has bought India together. The country is better prepared to deal with the economic disruption from COVID-19, if any. The pre-pandemic levels of output have been crossed, he said.
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