RBI’s Bold Reforms: Tax, Cheques, Loans, and Rates

The Reserve Bank of India, on this Thursday made certain important announcements. These announcements dealt with tax payments, cheques, online loans and the repo rate of India. 

UPI Based Tax Payments

The RBI has now proposed to expand the upper limit for the UPI- based tax payment mechanism from a mere ₹1 lakh to a value of ₹5 lakh. The RBI has done this as people use various UPI systems and have to often pay direct and indirect taxes, the values of which can be pretty high in certain cases. This will make it easier to operate and to pay tax liabilities. 

CTS And Its Implications

In another major announcement by the Reserve Bank, the cheque clearing time will now be down to only a few hours. Ordinarily, it takes two days for the banks to clear cheques. The reason for this is that the clearing operation is done in batches. Once a group of cheques has been accumulated, they are then sent for clearance every two days. But now the RBI wishes to speed up the entire process, such that it lasts only a few hours. The RBI will now be operating with the on-realization-settlement technique and not in batches. It has adopted the Cheque Truncation System (CTS).

Digital Lending And Its Fate

The RBI will also come up with a repository of all the Digital Lending Apps and maintain a database of the same. This would ensure that people are able to get enough information about the DLAs that they are trying to procure a loan from. Many times, certain DLAs portray themselves to be RBI regulated and falsely trap people, this repository will help avoid that. Also, the RBI will come up with proper rules and regulations that the Digital Lending Apps will be expected to abide by. 

Inflation And The Repo Rate

Along with this, the central bank has let the Repo or the Repurchase rate level unchanged at 6.5%. This is not very good for the market sentiment, as it would reduce borrowings and therefore economic activities, but this level is essential to tackle inflation. The inflation, particularly owing to food prices, has been on a high and this is one of the measures by the RBI to tame this rising inflation. 

These announcements underscore the RBI’s commitment to maintain a sound financial system and maintain stability.