The year 2021 has arrived with a lot of new changes and reforms across all sectors of the economy. Following this, the Reserve Bank of India has announced several measures in the personal finance sector to secure and simplify payments to the markets. Today, we are going to take a stroll through the new set of rules and regulations in the personal finance sector to understand what all will come into effect when India wakes up to 2021. 

1. Positive Pay System – RBI

During its monetary policy meeting in the month of August 2020, the RBI had announced a positive pay system for the purpose of cheque clearance and had declared that this will come into effect from the 1st day of the year i.e. 1st January 2021. RBI had issued notification to banks, that they would be required to enable this amenity for all their account holders issuing cheques above INR 50,000. Under this whole process, the cheques would be processed for payment by the drawee bank based on information provided by the consumer at the time of issuance of the cheque. The central bank has also declared that availing this benefit is at the discretion of the account holder, but banks can consider mandating this even for cheques valued more than INR 5 lakh. 

The best part about this mechanism is that your cheque payments will be much safer and will also reduce fraudulent activities which otherwise take place because of the tampering of cheque leaves.  

2. E-mandate relaxation on recurring transaction

The Reserve Bank of India had allowed the processing of E-mandates/standing instructions of credit card and debit cards for recurring transactions up to INR 2,000 back in August 2020. This limit had been hiked in December 2020 to INR 5000 and will come to effect from 1st January 2021.  This transition will help the consumers to make payments of up to INR 5,000 without the two-factor authentication process by giving an e-mandate for credit card and debit cards. This automatically makes it easier for consumers to make small value payments online. 

3. Relaxation on Contactless Card Payments 

Since the global covid-19 pandemic had made sure that all of us stayed back home, the RBI announced that from 1st January 2021, customers can make transactions of up to INR 5,000 using contactless cards without the need of two-factor authentication. This had been done to promote the adoption of digital payments in a safe and secure manner, before this the earlier limit for the same facility was INR 2000. This move will definitely push customers to make more online payments in a hassle-free manner and avoid physical payments through cash during this time. 

4. Standard term life insurance on offer

IRDAI has made it compulsory for life insurers to provide a standard individual life term insurance with effect from 1st Jan 2021. This particular insurance product has been termed as the ‘Saral JeevanBima’ along with the name of the insurance provider prefixed to the product’s name. The Saral Jeevan Bima will be offering a minimum assured amount of INR 5 lakh and the maximum amount has been fixed at INR 25 lakh. This step has been taken to ensure that insurance is affordable to all kinds of consumers. According to IRDAI this kind of a product will help rebuild a healthy relationship between insurers and the insured and will also help the consumer make an informed choice. 

5. Multi Cap mutual funds – Flexi cap

SEBI has issued new rules for multi-cap mutual fund schemes in September 2020. These new norms state that multi-cap fund schemes will now have to invest a minimum of 25% in each in large cap, mid cap, and small cap stocks mandatorily. Earlier, this category had the flexibility to invest anywhere without any restrictions. To comply with the new norms, SEBI has ensured that fund houses have some time to prepare themselves before January 2021. The advantage of this scheme is that if an investor has invested in one or more multi-cap mutual fund schemes, your erstwhile multi-cap scheme may shift to the 'Flexi-cap' category and consequently and you will not have to comply with the changed norms for the multi-cap category.

The new year has begun on a positive note and will bring in a lot of changes in the personal finance sector. These transitions will eventually help the modern consumer in a lot of areas. Let’s all hope this year turns out to be better than the previous one.