The Reserve Bank of India (RBI) on Wednesday allowed users to block their funds in their bank accounts using Unified Payments Interface (UPI), which can be used to make specific payments later on. This will enable faster transactions in the stock market, retail purchases of government securities, spends on e-commerce platforms and hotel bookings.
The move is aimed at building higher degree of trust in transactions as merchants will be assured of timely payments, while the funds remain in the customer’s account till actual delivery of goods or services. The National Payments Corporation of India (NPCI) will issue separate instructions on the issue.
“It has, therefore, been decided to introduce a single-block-and-multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities,” the central bank said in a statement.
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UPI has features which enable processing of mandates for recurring transactions and single-block-and-single-debit functionality and over 70 lakh autopay mandates are handled every month and more than 50% of initial public offer (IPO) applications are processed using the block feature of UPI. In November, UPI transactions in value terms stood at Rs 11.90 trillion, lower by 1.7% compared to that in October. Transaction in volume terms, remained flat at 7.30 billion in November.
Separately, the RBI has also expanded the scope of Bharat Bill Payment System (BBPS) to include all payments and collections. BBPS is mainly used to make recurring bill payments. However, BBPS currently does not enable non-recurring payments or collections.
Despite an increase in the volume of transactions on the platform, certain payments such as professional service fee payments, education fees, tax payments and rent collections were not processed. The addition of new modes of payments will make the platform accessible to a wider set of individuals and businesses, the central bank said.
