Latest RBI Guidelines for FDs, Credit Cards and UPI Transactions w.e.f 1st January 2025

As we welcome the New Year, significant changes are on the horizon, including the RBI's revised regulations for fixed deposits and modifications to the credit card offerings from certain issuers. Furthermore, this period typically prompts many employers to ask their employees for proof of tax-saving investments made during the financial year. 

Starting January 1, 2025, the Reserve Bank of India (RBI) will introduce several major regulatory changes impacting fixed deposits (FDs), credit cards, and Unified Payments Interface (UPI) transactions. Below is a summary of these updates:

New Fixed Deposit regulations from the RBI for Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs)

• For small deposits under Rs. 10,000, one can withdraw the entire amount within three months without any interest.
• For larger deposits, one can make partial withdrawals up to 50% of the principal or Rs. 500000 whichever is lower within three months without any interest on the withdrawn portion.
• In the event of a critical illness, individuals can withdraw their entire deposit early without incurring interest charges.
• Furthermore, NBFCs and HFCs will be required to inform depositors about maturity details at least two weeks prior to the maturity date, providing them with more time to make arrangements.

Credit Information Updates

• Banks and financial institutions will now update credit records more frequently, switching from monthly updates to every two weeks. 
• This change means that individuals can see their credit scores fluctuate more quickly, which is especially beneficial for those actively working to improve their scores or reduce their debts. This will enable closer monitoring of their credit situation.

Updated Fees and Lounge Access Guidelines

• The RBI has lifted the Rs. 500 limit on reward points for frequent UPI transactions.
• New credit card fees have been introduced, including a one per cent processing fee for utility transactions over Rs. 50,000 and for fuel transactions exceeding Rs. 10,000.
• Members of BOBCARD will enjoy complimentary access to domestic airport lounges if they fulfil the minimum spending criteria set in the previous quarter. Eternal cardholders need to spend Rs. 40,000 to access the lounges.
• For Rupay cardholders:

1. RBI has launched a spin-based lounge access policy where cardholders who spend between Rs. 10,000 and Rs. 50,000 daily will receive two complimentary lounge visits each quarter.
2. For those spending above Rs. 50,000 can earn up to four visits.
3. For those spending above Rs. 1,00,000 would get up to eight visits.
4. For those spending above Rs. 5,00,000 would enjoy unlimited lounge access each quarter.

EPS Pension withdrawal from any location

• Pensioners under the Employees Pension Scheme (EPS) can now receive their EPS pension at any bank branch across India. This development allows them to access their pension funds without the inconvenience of transferring the Pension Payment Order (PPO).
• The CPPS is scheduled to be launched as a component of the EPFO’s IT modernization initiative, CITES 2.01, aiming for operational readiness by January 1, 2025.
• Although there hasn't been an official announcement regarding the timeline for ATM withdrawals, a report from ET Now indicates that this feature might be introduced between May and June 2025.

Changes in UPI transactions

• In an NPCI circular dated October 25, 2024, it is stated, “A reference is invited to press release issued by Reserve Bank of India (RBI), dated 9th October 2024 with Subject 'Statement on Development and Regulatory Policies' whereby RBI has decided to increase per transaction limit from Rs 5,000 to Rs 10,000 for UPI 123Pay.”
• The transaction limit for UPI 123Pay has been raised from ₹5,000 to ₹10,000. This improvement is especially advantageous for feature phone users with restricted internet connectivity. The increase is intended to promote greater access to digital payment options throughout India.

These regulatory updates are a continuation of the RBI's commitment to improving consumer convenience, security, and the overall effectiveness of financial services in India. Customers are encouraged to review these changes and modify their financial activities as necessary. These updates demonstrate the RBI's continuous commitment to promoting financial inclusion and enhancing customer service within the banking industry.

FAQs

1. What is the UPI limit per day as per RBI guidelines?

According to NPCI, the daily UPI transaction limit is set at Rs.1 lakh. However, for transactions concerning capital markets, insurance, collections, and foreign inward remittances, this limit increases to Rs.2 lakh. Additionally, the UPI limit reaches Rs.5 lakh for specific transactions, including tax payments, payments to educational institutions and hospitals, payments for IPOs, and RBI retail direct scheme payments.

2. What should I do if I have a fixed deposit with an NBFC or HFC?

If you hold a fixed deposit with a Non-Banking Financial Company (NBFC) or a Housing Finance Company (HFC), be sure to understand the updated regulations regarding premature withdrawals. Additionally, make sure you receive notifications about maturity dates at least 14 days prior.

3. How will these changes affect financial planning?

These regulations could promote more strategic financial planning. With improved access to funds from fixed deposits and increased rewards on credit cards, consumers may modify their spending and saving behaviours. It is recommended to reassess financial strategies in response to these changes.