The Reserve Bank of India (RBI) has announced plans to introduce two significant measures aimed at streamlining digital transactions in the country. These initiatives were revealed by RBI Governor Shaktikanta Das during the announcement of the first Monetary Policy Committee (MPC) review for the 2024-25 financial year.

Cash Deposits with UPI: Building upon the success of cardless cash withdrawals using UPI at ATMs, the RBI proposes to enable cash deposits through UPI at Cash Deposit Machines (CDMs). This eliminates the need for debit cards for cash deposits, offering greater convenience for users. Governor Das stated that the RBI will soon release detailed guidelines regarding this new feature.

UPI Payments for Prepaid Instruments (PPIs): RBI also plans to allow Prepaid Payment Instrument (PPI) holders to make UPI payments through third-party UPI applications. Currently, PPI payments can only be made using the app or website provided by the PPI issuer itself. This change will mirror the functionality available to bank account holders, allowing PPI users the flexibility and convenience of utilizing popular third-party UPI apps for their transactions.

These initiatives hold the potential to significantly improve the user experience for digital payments:

• Reduced Reliance on Cards: UPI deposits eliminate the need to carry or manage debit cards, addressing concerns about card loss, theft, or damage.
• Enhanced Convenience: UPI deposits and third-party app access for PPIs offer users greater flexibility and ease of use when managing their finances.
• Increased Digital Adoption: By removing barriers and simplifying transactions, these measures encourage further adoption of digital payment methods for both cash deposits and smaller transactions.

The RBI's focus on UPI for cash deposits and broader functionality for PPIs reflects a commitment to making digital banking more accessible and user-friendly for all citizens.