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The Reserve Bank of India (RBI) today unveiled a set of developmental and regulatory policy measures aimed at strengthening financial markets, enhancing regulatory frameworks, and fostering innovation in the fintech and payment sectors.
Financial Markets:
The central bank has refined the framework for hedging foreign exchange risks, consolidating directions for both over-the-counter (OTC) and exchange-traded transactions under a single Master Direction. The move aims to simplify access to foreign exchange derivatives and allow a broader set of users with risk management expertise to manage exposures efficiently.
Regulations:
The RBI announced plans to introduce a unified framework for connected lending, covering loans to entities that can influence lender decisions. The framework will address potential conflicts of interest and moral hazard issues.
Additionally, a regulatory framework for Web-Aggregation of Loan Products (WALP) will be issued, focusing on transparency, customer-centric operations, and enabling borrowers to make informed choices while comparing multiple loan offers on electronic platforms.
Payments and Fintech:
To encourage digital payments, RBI will raise UPI transaction limits for hospitals and educational institutions from ₹1 lakh to ₹5 lakh per transaction. Similarly, e-mandates for recurring payments—including mutual fund subscriptions, insurance premiums, and credit card bill payments—will see the AFA-free limit increased from ₹15,000 to ₹1 lakh.
The RBI also plans to establish a cloud facility for the financial sector, aimed at enhancing security, integrity, and scalability of financial data. The facility will initially be operated by RBI’s IFTAS and later transferred to an entity owned by financial sector participants.
Furthermore, a Fintech Repository will be set up to collect information on fintech entities, including products, technology, and financial data. This will support regulators in developing policies tailored to emerging technologies like AI, machine learning, and blockchain, with operations expected to start by April 2024.
These measures underscore the RBI’s focus on improving market infrastructure, strengthening customer protections, and fostering innovation in the digital financial ecosystem.
[RBI]