Centralised portal to search unclaimed deposits, UPI for credit lines and other key RBI announcements

• UPI network to facilitate payments financed by credit from banks, reducing the cost of such offerings.
• Decision to create a web portal that allows for searches across multiple banks to identify possible unclaimed deposits.
• A comprehensive framework to be established to improve grievance redress and customer service by credit institutions and credit information companies.

The RBI monetary policy committee decided to keep policy repo rates unchanged at 6.50% in its monetary policy statement, much to the cheer of homebuyers. There were also five key announcements on various developmental and regulatory policy measures.

UPI network to facilitate payments financed by credits from banks

Currently, UPI transactions can only be made between deposit accounts at banks, sometimes with the help of pre-paid instruments like wallets. However, it is now proposed to expand the scope of UPI by enabling transfers to/from pre-sanctioned credit lines at banks in addition to deposit accounts. This means that the UPI network will facilitate payments financed by credit from banks, reducing the cost of such offerings and aiding in the development of unique products for the Indian market.

Presently UPI handles 75% of India's retail digital payments volume and the UPI system has been used to create products and features that align with India's goals for digital payments. Recently, RuPay credit cards were allowed to be linked to UPI.

Development of centralized web portal for public to search unclaimed deposits

If deposits in a bank remain unclaimed for 10 years, they are moved to the "Depositor Education and Awareness" (DEA) fund managed by the Reserve Bank of India. As the protection of depositors is a top priority, the RBI has taken various steps to prevent new deposits from becoming unclaimed and to ensure that existing unclaimed deposits are returned to their rightful owners or beneficiaries through due process. One of these steps is that banks must display a list of unclaimed deposits on their website.

To make it easier for depositors and beneficiaries to access this information, the RBI has decided to create a web portal that allows for searches across multiple banks to identify possible unclaimed deposits based on user input. This search functionality will be improved through the use of AI tools. At the end of February 2023, the unclaimed deposits at public sector banks exceeded ₹35,000 crore.

Developing an Onshore Non-deliverable Derivatives Market

Indian banks with International Financial Services Centre (IFSC) Banking Units (IBUs) were authorized to conduct INR non-deliverable foreign exchange derivative contracts (NDDCs) with non-residents and with each other as of June 1, 2020. To further develop the onshore INR NDDC and provide residents with greater flexibility in designing their hedging programs, banks with IBUs will now be allowed to offer INR NDDCs to residents in the onshore market. These banks can choose to settle their NDDC transactions with non-residents and with each other in foreign currency or INR, while transactions with residents must be settled in INR. Separate instructions related to this decision will be issued.

Enhancing efficiency of regulatory processes

Various entities must obtain licenses or authorisations from the Reserve Bank of India (RBI) to conduct activities that are regulated by the RBI. Additionally, regulated entities must periodically seek certain regulatory approvals from the RBI under various statutes and regulations. Currently, the application and approval processes for these licenses and approvals take place through a mix of online and offline modes.

In the 2023-24 Union Budget, it was announced that financial sector regulators need to simplify, streamline, and reduce the costs of compliance within specific time limits for applications made under various regulations. As a result, the RBI has decided to create a secure, web-based, centralized portal called "PRAVAAH" (Platform for Regulatory Application, Validation And Authorisation) that will gradually be extended to handle all types of applications made to the RBI across all functions.

Grievance redress mechanism and customer service provided by the credit institutions and credit information companies

Due to the rise in customer complaints regarding credit information reporting and the functioning of credit information companies (CICs), it has been decided to establish a comprehensive framework for improving the efficacy of the grievance redress mechanism and customer service provided by both credit institutions (CIs) and CICs. As part of this framework, the CICs will be brought under the Reserve Bank Integrated Ombudsman Scheme (RB-IOS).

In addition to this, several measures will be implemented, including a compensation mechanism for delayed updates/corrections of credit information, SMS/email alerts to customers when their credit information is accessed by CICs, a timeframe for the ingestion of data received by CICs from credit institutions, and disclosures regarding the number and nature of customer complaints received on the website of CICs. Detailed guidelines on these measures will be issued shortly.

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