Your money matters relating to savings and investments will witness a few important changes in 2021. From writing cheques to swiping of credit cards to making investments in mutual funds, there are a handful of key personal finance changes to keep an eye on while moving into 2021. Here are a few of them.

1. Positive Pay mechanism for cheques

To further augment customer safety in cheque payments and reduce instances of fraud occurring on account of tampering of cheque leaves, RBI has now decided to introduce a mechanism of Positive Pay 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. Positive Pay System is getting implemented from January 01, 2021.

How it works: All one needs to do is share the details of issued cheque like Cheque Number, Cheque date, Payee name, Account number, Amount etc 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.

2. Contactless payments

In order to expand the adoption of digital payments in a safe and secure manner, the RBI has proposed to enhance the limit for contactless card transactions from Rs 2,000 to Rs 5,000 from January 1, 2021.
The increase in limits will, however, be at the discretion of the user. On NFC enabled cards, there is no requirement to enter PIN while making transactions at merchant establishments.

3. E-mandate for recurring transactions

The transaction limit on e-mandates for recurring transactions through cards and UPI will be increased from Rs 2,000 to Rs 5,000 from January 1, 2021. The relaxation will help users in making high ticket recurring payments like utility bills, investments, two-wheeler EMIs, consumer durable EMIs etc. seamlessly. The increase in limits will, however, be at the discretion of the user.

A cardholder desirous of opting for e-mandate facility on card shall 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. This facility will now also be available for UPI users.

4. Digital payment disputes

The RBI has announced the introduction of Online Dispute Resolution (ODR) system for resolving customer disputes and grievances pertaining to digital payments, using a system-driven and rule-based mechanism with zero or minimal manual intervention. The authorised entities have been asked to implement an ODR system for disputes and grievances related to failed transactions in their respective payment systems by January 1, 2021.

5. Standard term life insurance plan

Buying term insurance plan will become much simpler than before. IRDAI has directed all life insurers to mandatorily offer Standard Individual Term Life Insurance Product to be called ‘Saral Jeevan Bima’with effect from 1st January, 2021. The Standard term life insurance plan will have simple features and standard terms and conditions. The minimum sum assured is kept at Rs 5 lakh while the maximum cover can be for Rs 25 lakh. Anyone between 18 and 65 years of age can buy the plan.

6. Multi-cap mutual fund scheme

There has been a revamp in the Multi Cap Funds and they had to comply with new guidelines by January 2021. SEBI had decided to partially modify the scheme characteristics of Multi-Cap Fund. As per the earlier categorisation, in a Multi-Cap Fund, the Minimum investment in equity & equity related instruments is to be 65% of total assets investing across large cap, mid-cap, small-cap stocks.

Now, the minimum allocation in large-mid-small cap companies has been defined. The Minimum investment in equity & equity related instruments – 75% of total assets in the following manner:

• Minimum investment in equity & equity related instruments of large-cap companies – 25% of total assets
• Minimum investment in equity & equity related instruments of mid cap companies – 25% of total assets
• Minimum investment in equity & equity related instruments of small cap companies – 25% of total assets

7. New Riskometer tool

Selection of mutual fund scheme based on one’s risk profile also becomes easier from the new year. Till now, the Riskometer of a mutual fund scheme depicted five risk areas – Low, Moderately Low, Moderate, Moderately High and High Risk.

Going forward, 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. SEBI has informed that this new mutual fund rule shall be in force with effect from January 1, 2021, to all the existing schemes and all schemes to be launched on or thereafter.