Financial Procedures That Take Effect From January 1
The world has been ready to welcome 2024 with sheer joy and hope. The financial activities of Indian households are also going to see some crucial changes with the new financial rules being implemented. This includes the penal interest rate withdrawals on defaulted borrowers, the RBI mandate on banks to consult with the customer to raise the EMI or loan tenure, a simplified insurance policy customer information sheet, a centralized reporting system for demat account holders, Withdrawal of paper applications for SIM cards, Demat, mutual fund nominee updating and blocking of unused UPI ID”s, etc.
No Penal Interest on Defaulted Borrowers
The Reserve Bank of India (RBI) has instructed banks not to impose penal interest on defaulted loans. Instead, banks can only charge fines. The RBI will extend the limit of the rule to all existing loans except credit cards. Currently, banks are levying penal interest on defaulted loans, making the repayment exorbitant. However, when the new rule takes effect, the borrowers will only incur a small amount in the form of fines, which will lessen the repayment amount.
Loan tenure and EMI
The RBI has mandated banks to consult with borrowers ahead of rising EMIs or loan tenures when new interest rates come into effect. With this, borrowers will have the power to determine their repayment model either by raising loan tenure or EMI. In addition, borrowers can choose between floating or stable interest rates.
Policy details
In a significant move, the Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for insurance companies to furnish policy details, such as the sum assured, coverage specifics, exclusions, and claims procedure, in a standardised format, starting January 1st, 2024. This long-standing customer demand, which has been ignored for too long, is finally being addressed. The move is aimed at making it easier for policyholders to understand the terms and conditions of their insurance policies.
Centralised reporting system
A centralized reporting mechanism will be in place from January 1 onwards in order to inform the authorities about the demise of a stock investor, which in turn will allow nominees to access the shares easily and report the death of a stockholder to authorities by submitting the death certificate and PAN.
No paper form for SIM
The digital application submission for the new SIM instead of filing the application on paper will start on January 1. There will be no need to file the application on paper along with a photograph. Instead, all procedures could be carried out online.
UPI apps freezing
All UPI IDs and numbers that have been inactive for one year will be blocked on January 1, according to the National Payments Corporation of India (NPCA). According to the guidelines, numbers and IDs will be blocked for at least one year.
Adding nominees to demat and mutual funds
The Securities and Exchange Board of India (SEBI) has extended the deadline to add a nominee in demat accounts and mutual fund investments to June 30, 2024, from December 31, 2023.
