SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks with Heavy Fines – What It Means for You!

SEBI has proposed raising the UPI transaction limit for capital markets from Rs2 lakh to Rs5 lakh to enhance efficiency. Meanwhile, RBI has imposed fines on Equitas Small Finance Bank, India Post Payments Bank, and Aptus Finance India for regulatory non-compliance. These penalties do not impact customer transactions or agreements with the banks.

CONTENTS:

• SEBI Proposes Rs5 Lakh UPI Limit for Capital Markets – Big Boost for Investors!
• RBI Imposes Penalties on Equitas SFB, IPPB, and Aptus Finance for Regulatory Lapses
• RBI Takes Action: Fines Imposed on Two Banks and an NBFC

SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks with Heavy Fines – What It Means for You!

SEBI Proposes Rs5 Lakh UPI Limit for Capital Markets – Big Boost for Investors!

SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks The Securities and Exchange Board of India (SEBI) has proposed increasing the daily transaction limit for capital market transactions via UPI from Rs2 lakh to Rs5 lakh, as outlined in a consultation paper released on January 31, 2025. This move aims to improve the efficiency of UPI-based transfers within capital markets.

The proposal is based on an in-depth analysis of transaction data from leading brokers. Findings indicate that 92.9% of transactions are below Rs1 lakh, while 3.9% fall between Rs1-2 lakh, and only 1.3% range from Rs2-3 lakh. A similar pattern is observed in total daily transactions per investor, with 91.5% under Rs1 lakh, 4.6% between Rs1-2 lakh, and 1.6% from Rs2-3 lakh.

SEBI asserts that raising the limit should not impose substantial costs, as the existing infrastructure—comprising NPCI, banks, registered intermediaries, and SEBI—is already equipped to handle such changes. The National Payments Corporation of India (NPCI) has affirmed its preparedness to support the adjustment, highlighting that issuing new UPI handles is an ongoing process.

Nevertheless, SEBI will periodically review the Rs5 lakh limit in collaboration with NPCI. In a related update, NPCI has announced that, effective February 1, 2025, its central system will reject transactions containing special characters, enforcing a strictly alphanumeric format for transaction IDs.

This initiative marks a significant advancement in modernizing India’s capital market transactions while ensuring security and operational efficiency.

RBI Imposes Penalties on Equitas SFB, IPPB, and Aptus Finance for Regulatory Lapses

SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks The Reserve Bank of India (RBI) announced on Friday that it has imposed penalties on Equitas Small Finance Bank, India Post Payments Bank, and Aptus Finance India Pvt Ltd due to regulatory compliance deficiencies.

Equitas Small Finance Bank has been fined Rs 65 lakh for failing to adhere to specific guidelines related to the Levy of Foreclosure Charges/Pre-payment Penalty on Floating Rate Term Loans and Credit Flow to Agriculture – Collateral-free Agricultural Loans.

Additionally, India Post Payments Bank Ltd has been penalized Rs 26.70 lakh for non-compliance with directives concerning Customer Service in Banks.

Aptus Finance India Pvt Ltd has also been fined Rs 3.10 lakh for violating certain provisions applicable to non-banking financial companies (NBFCs).

The RBI clarified that these penalties are solely due to regulatory lapses and do not affect the legitimacy of any transactions or agreements these entities have entered into with their customers.

RBI Takes Action: Fines Imposed on Two Banks and an NBFC – Here’s Why

SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks The Reserve Bank of India (RBI) has taken strict action against India Post Payments Bank (IPPB) and Equitas Small Finance Bank, along with an NBFC, by imposing monetary penalties. Let’s examine the reasons behind this decision and whether it will impact customers.

RBI’s Regulatory Oversight

As the regulatory authority for banking and non-banking financial institutions across India, the RBI enforces strict compliance with financial guidelines. In its latest move, the central bank has penalized India Post Payments Bank, Equitas Small Finance Bank, and Aptus Finance India Pvt Ltd for regulatory violations.

• India Post Payments Bank (IPPB) has been fined Rs 26.70 lakh for non-compliance with banking regulations.
• Equitas Small Finance Bank faces a Rs 65 lakh penalty for failing to follow RBI guidelines.
• Aptus Finance India Pvt Ltd has been fined Rs 3.10 lakh for violating norms related to management changes.

Violations and Penalties

Aptus Finance India Pvt Ltd made changes to its board without obtaining prior written approval from the RBI, resulting in a 30% turnover in directors (excluding independent directors). The RBI identified compliance deficiencies after reviewing appointment-related correspondence, leading to a show cause notice and subsequent penalty.

India Post Payments Bank (IPPB) upgraded certain savings accounts without obtaining customer consent and imposed annual charges after the upgradation. Upon confirmation of these actions, the RBI decided to impose a fine.

Equitas Small Finance Bank levied foreclosure charges on certain floating rate term loans taken by individuals for non-business purposes. Additionally, collateral security was obtained for some loans up to Rs 1.6 lakh, violating regulatory guidelines.

Impact on Customers

SEBI Proposes Rs5 Lakh UPI Limit & RBI Cracks Down on Banks The RBI has clarified that these penalties are imposed solely for compliance deficiencies and do not impact customer transactions or agreements with the concerned banks or financial institutions.