The Reserve Bank of India (RBI) in its bi-monthly monetary policy statement, has shared its plans for developmental and regulatory policy measures in the realm of fintech, payments, and export and import. Here are some of the changes the RBI plans to implement in the coming months:
Set up a Digital Payments Intelligence Platform:
The RBI intends to mitigate payment fraud risks by setting up a “Digital Payments Intelligence Platform” that “will harness advanced technologies”, they said. The RBI has also constituted a committee headed by the Chairman, A.P. Hota, former MD & CEO, of NPCI, which will be tasked with examining the various aspects of setting up a digital public infrastructure for the Digital Payments Intelligence Platform.
A report by ET, with sources in the know, stated that the committee will also be tasked with defining :
- the amount of data entities like banks and fintech will need to provide
- the modalities for identifying transactions as fraudulent ones
- cost requirements and ways through which the platform can become financially sustainable
Further, the sources stated that fraud transactions will be reported to the Central Payments Fraud Information Repository (CPFIR). The committee will also have to recommend guardrails to ensure customer data remains safe throughout the process.
The report also mentioned potential members of the panel- including representatives of NPCI, State Bank of India, HDFC Bank, and ICICI Bank and payments industry leaders like Vipin Surelia, Head of Risk at Visa, Arif Khan, Chief Innovation Officer at Razorpay, Jitendra Gupta, Founder of Jupiter, and Pranay Jhaveri, Managing Director of Euronet.
The Committee is expected to give its recommendations within two months, said the RBI
According to the RBI’s annual report, fraud has occurred predominantly in the category of digital payments (card/internet). 2023-24 saw 29,082 frauds in card transactions, valued at ₹ 1,457 crore a major increase from 2022-23 which saw 6,699 instances of fraud amounting to ₹277 crores. The report stated that the RBI was looking at measures to combat fraud like moving away from the SMS-based one-time password (OTP) and instead adopting alternate risk-based authentication mechanisms that will leverage behavioural biometrics, location/ historical payments, digital tokens, and other in-app ways. Further, the RBI is also looking to implement the ‘payee name look-up facility’ in compliance with the newly enacted Digital Personal Data Protection Act, 2023 to combat fraudulent transactions.
Auto-replenishment for Fastag, National Common Mobility Card (NCMC), UPI Lite wallet, under the e-mandate framework for recurring payments
RBI’sregulations on recurring transactions, which went into effect on October 1, 2021, require customers to set up something called an e-mandate for recurring transactions such as subscriptions, monthly bill payments, etc. via credit and debit cards. These payments recur with fixed periodicity such as daily, weekly, monthly, etc.
The RBI has proposed including payments, such as replenishment of balances in Fastag, NCMC, UPI Lite wallet, etc. into the e-mandate framework, as they are also recurring in nature. However, the key difference for these payments will be, that the replenishments are not time specific. Thus, the automatic replenishment will be triggered when the balance in Fastag or NCMC falls below a threshold amount set by the customer, they said. Under, the current e-mandate framework, a pre-debit notification is sent to a customer at least a 24-hours before the actual debit from the customer’s account. However, the RBI has proposed exempting this requirement for automatic replenishment of balances in Fastag, NCMC, UPI Lite wallet etc.
Guidelines for these proposals will be issued shortly.
Easing export and import regulations under the Foreign Exchange Management Act (FEMA), 1999
The RBI has decided to rationalize existing guidelines on the export and import of goods and services. The RBI said that keeping in view the progressive liberalization under FEMA 1999 and the changing dynamics of cross-border trade transactions globally it will be releasing new guidelines to promote ease of doing business for all the stakeholders. The new guidelines aim to improve operational flexibility for Authorized Dealer banks. The draft regulations and directions will be released by June 2024, after which they will be open to feedback from stakeholders.
Also Read:
- Fraudsters Borrow Loan On MobiKwik By Impersonating Someone Else
- Finance Ministry hosts workshop with Law Enforcement Agencies (LEAs), Start-ups and Fintech companies to address digital financial fraud
- More Questions than Answers: Finance Ministry FAQs on FEMA Amendment Rules, 2023
- RBI increases UPI and recurring transaction limits for certain categories
FAQs
FEMA outlines the formalities and procedures for the dealings of all foreign exchange transactions in India. These foreign exchange transactions have been classified into two categories — Capital Account Transactions and Current Account Transactions.
What is the FEMA Act of RBI? ›
These regulations seek to regulate acquisition and transfer of a foreign security by a person resident in India i.e. investment by Indian entities in overseas joint ventures and wholly owned subsidiaries as also investment by a person resident in India in shares and securities issued outside India.
What is the FEMA declaration in India? ›
As per FEMA guidelines, a FEMA declaration is necessary for inward remittance to verify the legality and transparency of the money being transferred into the country. The purpose of the FEMA declaration is to help authorities keep track of where the money is coming from and why it's being sent.
What is the rule 10 of FEMA? ›
(1) Any person resident in India who, (i) has an account appearing as a non-performing asset; or (ii) is classified as a wilful defaulter by any bank; or (iii) is under investigation by a financial service regulator or by investigative agencies in India, namely, the Central Bureau of Investigation or Directorate of ...
What are the FEMA India rules for NRI? ›
Investment Rules under FEMA for NRIs
NRIs are permitted to invest in shares, debentures, and other securities through the Portfolio Investment Scheme (PIS) which is regulated by the Reserve Bank of India (RBI). They can also invest in mutual funds and government bonds without any limit.
What is the FEMA violation in India? ›
Offences typically involve non-compliance with regulatory requirements such as misreporting or under-reporting of transactions, non-adherence to the rules regarding foreign investments and currency exchanges, etc. – Penalties: If a person or entity commits an offence under FEMA, they are subject to penalties.
What is the FEMA limit? ›
According to FEMA guidelines for NRIs, sale proceeds of such assets are non-repatriable outside India without RBI approval. Repatriation of up to USD 1 million per financial year is allowed if you have inherited the property or retired from employment in India.
How much inward remittance is allowed in India? ›
there is no limit for inward remittance in India. However, under the OPGSP model mandated by the RBI, there is a transaction cap of USD 10,000. Hence any high-volume B2B cross border payments will be split into 10,000 USD each until the full payment is completed.
Can NRIs buy foreign currency in India? ›
You could exchange your foreign currency in the Indian bank where you have opened a NRO Account. For instance, HDFC Bank provides this walk-in facility to all its NRI clients in the form of NRI banking services. The bank charges a nominal transaction fee.
What are the rules for NRI account in India? ›
As per the Foreign Exchange Management Act (FEMA) guidelines, an NRI cannot have a savings account in his or her name in India. You must convert all your savings (money earned abroad) to a Non-Resident External Account (NRE) or Non-Resident Ordinary (NRO) account.
How much can you transfer abroad annually? The Reserve Bank of India (RBI) has set a financial year limit of $2,50,000 (INR 2.08 Cr) for foreign remittances, which applies mainly to personal remittances. For international business- payments, the volume of transactions generally goes above and beyond $250,000 annually.
Who is an NRI as per RBI? ›
Definition of NRI/PIO
In terms of Regulation 2 of FEMA Notification No. 13 dated May 3, 2000, Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India.
What is the remittance limit under FEMA? ›
Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
What is the compliance of FEMA guidelines? ›
Compliance Requirements for NRIs Under FEMA
These include declaring their NRI status to the fund house, investing through appropriate channels such as an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account, and ensuring that their investments do not breach the prescribed limits of foreign investment.
What is the limit of FEMA 400%? ›
Permissible limits
Financial commitment shall not exceed 400% of net worth as per the last audited balance sheet (not more than 18 months preceding the date of transaction) or USD 1 (one) billion (or its equivalent) in a financial year, whichever is lower.
What is FEMA requirements? ›
The applicant must be a U.S. citizen, non-citizen national, or qualified non-citizen. FEMA must be able to verify the applicant's identity. The applicant's insurance, or other forms of disaster assistance received, cannot meet their disaster-caused needs.
What is FEMA protocol? ›
The Common Alerting Protocol (CAP) allows emergency messages to be simultaneously disseminated over a wide variety of existing and emerging public alerting systems.
What does FEMA cover in a disaster? ›
FEMA may provide money and other services to help you recover from losses caused by a Presidentially declared disaster, such as damage to your home, car, and other personal items. Note: FEMA does not provide assistance for small businesses impacted by a disaster.
What are the 4 steps of FEMA? ›
Emergency managers think of disasters as recurring events with four phases: Mitigation, Preparedness, Response, and Recovery.
