October will introduce various changes affecting bank customers, savers, and taxpayers. A notable event is the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting scheduled from October 5 to October 7. On October 7, the committee is expected to announce its decision regarding the repo rate, which currently stands at 5.25% following the bank’s review in August.

The outcome of this meeting has the potential to influence both borrowing and deposit rates. It is important to note that banks may not immediately adjust their rates in line with any changes declared by the RBI. Therefore, the decision could have a delayed impact on the financial market.

Revised Rules for Bulk Deposit Interest Rates

The RBI is revising its framework concerning how banks disclose and set interest rates for bulk deposits, effective from October 1. Under the new regulations, banks will be obliged to reveal their bulk deposit rates in advance and update them daily by 10 am.

Moreover, while banks must generally provide a uniform interest rate for similar bulk deposits, they may offer varied rates depending on the Liquidity Coverage Ratio (LCR) applicable to the deposits. These changes are designed to enhance transparency in the rate-setting process associated with bulk deposits.

The reform aims to create a clearer understanding for customers about the interest they can expect and how it relates to their deposit choices.

Impact of UPI Merchant Payment Changes

Beginning on October 15, changes to the Unified Payments Interface (UPI) will be implemented. A Merchant Discount Rate (MDR) will be introduced for transactions exceeding Rs 2,000. Transactions equal to or below this threshold, including those covered by the zero-MDR programme for small traders, will continue to incur no charges.

The MDR applicable will vary based on the merchant’s category. These changes are currently facing scrutiny in the Supreme Court, which has called for responses regarding the legality and consultation behind the new rule mandating a 0.4% MDR on specified transactions above Rs 2,000. Unless the court intervenes, this new framework is set to take effect on the designated date.

The introduction of MDR is part of a wider restructuring of the payment ecosystem, and stakeholders are advised to keep informed about the developments in this area.

Changes to LPG Subsidy and Aadhaar Authentication

Consumers reliant on subsidised Liquefied Petroleum Gas (LPG) will need to complete the Biometric Aadhaar Authentication (BAA) process in order to continue receiving refills at the regulated selling price. Those who have not yet verified their Aadhaar must complete this authentication before October 1.

Once accomplished, consumers can then book LPG refills at the RSP with the applicable government subsidy. Consequently, it is advisable for all LPG users to verify their Aadhaar status to ensure uninterrupted access to subsidised refills.

Streamlined Property Purchase Processes

As of October 1, it will be easier for resident buyers to purchase property from non-residents. Resident individuals and Hindu Undivided Families (HUFs) will no longer need to acquire a Tax Deduction and Collection Account Number (TAN) for tax at source (TDS) deductions associated with the transaction.

Instead, buyers will use their Permanent Account Number (PAN) to manage the TDS deductions, deposits, and reporting. This change is designed to simplify compliance for residents engaged in property transactions with non-residents.

The transition reflects broader reforms aimed at reducing administrative burdens and streamlining the process of property purchase in a more efficient manner.

Revised SBI ATM Transaction Rules

The State Bank of India (SBI) will also modify the number of free transactions available for salary package account holders at other banks’ ATMs. From October 1, the limit on free transactions will be reduced from ten to five monthly.

This modification applies to all transactions, both financial and non-financial, made at other banks’ ATMs and Automated Deposit cum Withdrawal Machines (ADWMs). Basic Savings Bank Deposit (BSBD) account holders will still enjoy four free cash withdrawals per month, but any additional transactions will incur a fee of Rs 15 plus GST.

Despite these changes, SBI has confirmed that digital transactions will remain free of restrictions. Thus, customers must keep a close watch on their free transaction limits to avoid incurring additional charges.

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