Money Matters! 5 things that have changed from 1 January 2021 – from contactless card payment, cheque payment, utility bills, EMIs to life insurance

From 1 January, 2021 many things that impact your money life, including transactions have changed. To ensure you do not end up losing money and to make sure you get all the benefits, we bring you a list of five such things that have changed since the beginning of this year. Know about them and remain updated. These things have been done to lend simplicity and conveniences to your daily money related matters. These include critically important things like contactless card payment, cheque payment, utility bills, investments, EMIs to life insurance. 

1. Positive Pay mechanism for cheque payment – As per the announcements made by the Reserve Bank of India (RBI), Positive Pay System has got implemented from 1 January, 2021. The banking regulator has implemented this system to further enhance the customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves. The system is now effective for all cheques of value Rs 50,000 and above. Under this mechanism, cheques will be processed for payment by the drawee bank based on information passed on by its customer at the time of issuance of cheque. 

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Know how the Positive Pay System works regarding cheque payment:  

One needs to share the details of issued cheque, including cheque number, cheque issuance date, payee name, account number, amount along with an image of the front and reverse side of the cheque, before handing it over to the beneficiary.  

When the beneficiary submits the cheque for encashment, the cheque details are compared with the details provided to the Bank through Positive Pay. If the details match, the cheque is honoured. In case of mismatch in cheque details, the cheque is referred to you. 
 
Utility bills, investments, two-wheeler EMIs, consumer durable EMIs: E-mandate for recurring transactions 

2. E-mandate

The transaction limit on e-mandates for recurring transactions through cards and UPI has increased from Rs 2,000 to Rs 5,000 from 1 January 1. This is a positive development and will provide convenience in making high ticket recurring payments like utility bills, investments, two-wheeler EMIs, consumer durable EMIs etc.   

A cardholder opting for e-mandate facility on card is required to undertake a one-time registration process, with additional factor authentication (AFA) validation by the issuer. An e-mandate on card for recurring transactions shall be registered only after successful AFA validation, in addition to the normal process required by the issuer.  

3. Standard term life insurance plan 

The Insurance Regulatory Authority of India (IRDAI) has simplified the process of buying term insurance plan and will become much simpler than before. The regulator has directed all life insurance providers to mandatorily offer Standard Individual Term Life Insurance Product. This will be known as ‘Saral Jeevan Bima’. This has come onto affect form 1 January 2021. The standard term plan will have simple features and standard terms and conditions. The minimum sum assured is Rs 5 lakh and the maximum cover is for Rs 25 lakh. Anyone in the age group of 18-65 years can buy the plan. 

4. New Riskometer tool 

Another important change that has become effective from 1 January 2021 is the selection of mutual fund scheme. This will be based on the risk profile of an individual. The Riskometer of a mutual fund scheme depicted five risk areas viz. low, moderately low, moderate, moderately high and high risk. 

There will be a new risk area for the MF schemes as SEBI has decided to introduce, ‘Very High Risk’ as the sixth risk profile for the MF schemes. 

5. Contactless payments 

The RBI has proposed to enhance the limit for contactless card payment or transactions from Rs 2,000 to Rs 5,000 from January 1, 2021 to expand the adoption of digital payments in a safe and secure manner,  On Near Field Communication (NFC) enabled cards, there is no requirement to enter PIN while making transactions at merchant establishments.