Banking Daily News: 12th AUG 2023

RBI Implements ICRR to Curb Liquidity

The Reserve Bank of India (RBI) has instructed banks to apply a 10% incremental cash reserve ratio (ICRR) to their net demand and time liabilities (NDTL) increase between May 19 and July 28, 2023. Aimed at tightening liquidity, this move will absorb approximately Rs 1 lakh crore of excess funds. A temporary measure to manage liquidity related to the return of high denomination notes, it will be reviewed in September, and funds may be reintroduced to the banking system before the festive season.

Key Facts:

• RBI Implements 10% ICRR: To manage excess liquidity.
• Applicable to Increase in NDTL: Between May 19 and July 28, 2023.
• Absorption of Rs 1 Lakh Crore: Aimed at controlling surplus funds.
• Temporary Measure: Connected to the return of high denomination notes.
• Review in September: Funds may be returned before the festive season.

RBI Raises UPI Lite Limit to Rs 500

The Reserve Bank of India (RBI) is set to increase the per transaction payment limit for UPI Lite in offline mode from Rs 200 to Rs 500, maintaining the overall limit of Rs 2,000 to mitigate risks. RBI Governor Shaktikanta Das sees this change as a way to encourage broader digital payment use. New features, including "Conversational Payments" on UPI and offline payments via NFC technology through 'UPI-Lite,' will also be introduced to enhance the digital payment experience.

Key Points:

• UPI Lite Limit Increase: From Rs 200 to Rs 500 per transaction.
• Overall Limit Maintained: Rs 2,000 per payment instrument in offline mode.
• Encouraging Digital Payments: RBI aims to facilitate wider adoption.
• Introduction of Conversational Payments: AI-powered interactions on UPI.
• NFC Technology Integration: For faster, accessible offline payments via 'UPI-Lite'.

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