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RBI enhances UPI mandate: Can you register a single UPI mandate to start multiple SIPs at a time?

RBI has decided to enhance the mandate of the UPI further from single-block-and-single-debit transactions to single-block-and-multiple-debits functionality.

RBI enhances UPI mandate: Can you register a single UPI mandate to start multiple SIPs at a time?
you may register a mandate with UPI for multiple transactions – like paying monthly bills or investing periodically through Systematic Investment Plan (SIP) etc.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to enhance the mandate of the Unified Payments Interface (UPI) further from single-block-and-single-debit transactions to single-block-and-multiple-debits functionality. As a result, instead of making a single payment – like paying a shopkeeper/service provider for any goods or services – at a time, you may register a mandate with UPI for multiple transactions – like paying monthly bills or investing periodically through Systematic Investment Plan (SIP) etc.

However, can an investor start multiple SIPs in different mutual fund (MF) schemes of an Asset Management Company (AMC) with a single UPI mandate to the AMC?

Currently, for example, more than one SIPs can’t be started with a single cheque in favour of an AMC, but the cheque may be used to register a mandate to initiate systematic payment in more than one MF scheme of that AMC.

Replying on this issue, Deepak M. Sharma, President & Chief Digital Officer, Kotak Mahindra Bank said, “UPI as an autopay functionality is even being used for SIP and mutual fund use cases, but there is no blocking of fund, but in single block multiple redemption, blocking of fund will happen and merchant can initiate multiple debits.”

Talking on the benefits of the enhancement of UPI to Single-Block-and-Multiple-Debits, Sharma further said, “UPI is now allowed to be used for blocking user funds for specific purposes. This would be helpful for hotel bookings, purchase of securities in the secondary capital market as also purchase of government securities using the RBI’s Retail Direct scheme, e-commerce transactions such as on Flipkart and Amazon etc. It could reduce cash on delivery usage as well.”

“This step is expected to build 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. After this functionality, merchants will be able to make multiple debits from a bank account of a customer by taking his consent for the maximum permissible amount,” he added.

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First published on: 08-12-2022 at 10:52:54 pm