ET Wealth Wisdom Ep 101: From January 1, these 5 rule changes will impact your personal finances

Hi everyone and welcome to episode 101 of the ET Wealth Wisdom podcast

I am Tania Jaleel

It will be the new year in a couple of days

And with a bunch rules will come into effect that will have an impact on your money

In this podcast, I will take you through 5 rule changes that will come into effect from January 1

Positive Pay mechanism for cheques
The RBI in its August 2020 bi-monthly monetary policy announced that a Positive Pay System for cheque clearing would be launched from Jan 1, 2021.

The Positive Pay mechanism is meant for use for large value cheques. Banks are required to enable this for all account holders issuing cheques above Rs 50,000.

An RBI notification states that availing this facility is at the discretion of the account holder, but banks may consider making it mandatory for cheques valued more than Rs 5 lakh.

Relaxation in e-mandates for recurring transactions
In its August 2020 bi-monthly monetary policy RBI also allowed processing of e-mandates of credit and debit cards for recurring transactions with a limit of Rs 2,000.

In its December 2020 bi-monthly monetary policy, the apex bank announced that this limit would be hiked from Rs, 2000 to Rs 5000 starting Jan 1, 2020.

This move will help customers make payments of up to Rs 5,000 without the two-factor authentication process by giving an e-mandate for credit and debit cards.

Relaxation for contactless card transactions
With effect from January 1, 2021, customers can make transactions up to Rs 5,000 using contactless cards without additional two-factor authentication.

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Insurers to provide standard term life insurance plan
IRDAI has mandated life insurance companies to provide a standard individual life term insurance policy from January 1, 2021.

This standard term insurance product will be called Saral Jeevan Bima with the insurer’s name prefixed to the product name.

The Saral Jeevan Bima is expected to offer a minimum sum insured of Rs 5 lakh and maximum sum insured of Rs 25 lakh.

According to IRDAI, such a standard product will make it easier for the customers to make an informed choice, enhance the trust between the Insurers and the insured, and reduce mis-selling as well as potential disputes at the time of claim settlement.

Changes in the multi-cap mutual fund schemes
Sebi in its circular dated September 11, issued new norms for multi-cap mutual fund schemes.

As per the new norms, multi-cap mutual fund schemes are mandated to invest at least 25% each in large-cap, mid-cap, and small-cap stocks.
Earlier, this category had the flexibility to invest anywhere.

Sebi has given fund houses time till January 2021 to comply with the new norms.

It has also been reported that many multi-cap schemes may shift their category to ‘Flexi-cap’ rather than comply with the new rules.
So if you have invested in a multi-cap scheme then there may be some changes in the scheme category or its investment pattern across large, mid and small caps.



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