India’s digital ecosystem is coming to the aid in providing essential financial services
Even for first-time users and investors, signing up and onboarding is now easy and paperless
After some companies asked their employees to work from home starting 16 March, to contain the spread of the Covid-19 pandemic, payments platform PhonePe saw a sudden jump in some categories of transactions. These included money transfers, recharges, bill payments, and those with its partners that provide essential services such as groceries, medicine and food. The trend with PhonePe shows that more people resorted to digital transactions even before the country went into a complete lockdown on 24 March.
The way the digital ecosystem has evolved in India, many financial transactions can be done online without the need to visit your bank branch, or the office of an insurance company or a mutual fund house. Online transactions are not only helping people cope with the lockdown, but are also aiding them in maintaining social distancing and avoiding handling currency notes.
According to PhonePe, even in the offline space (physical stores), the company is seeing a spike in grocery purchases. These trends are the same across all locations, including tier-2 and tier-3 cities. Wherever necessary, the government is relaxing norms to ensure that none of the financial services are disrupted due to the lockdown.
Here’s how you can continue to carry out all your financial transactions without interruption, across various sectors.
On 24 March, finance minister Nirmala Sitharaman provided some relief to individuals for banking services. Banks will not levy any charges or penalties if customers are unable to maintain the average monthly balance or average quarterly balance in their bank accounts. Also, there will be no charges for cash withdrawals from ATMs. The waivers are valid until the end of June.
Banking comes under essential services. That’s why branches have been kept open despite the lockdown. Customers do have the option of going to the branch for any urgent requirement. But for all practical purposes, customers may not need to go to their branches. “Many customers are not comfortable doing high-value transactions on the internet and prefer to go to the bank branch for them. We have been communicating with customers to tell them that online banking is secure," said Surinder Chawla, head, retail liabilities and wealth management, RBL Bank.
If you have never used online banking before, it’s possible to activate it using your registered mobile number and debit card. Most banks now allow customers to activate netbanking themselves through the bank’s website. According to Sameer Shetty, head, digital banking, Axis Bank, “A customer can avail of over 250 features on digital platforms—internet banking and mobile app."
Online banking can be accessed either through the bank’s website or through the bank’s app, installed on a smartphone.
On a bank’s website, customers can practically avail of all the banking services that are available at the bank branch. These include sending and receiving money, credit card payment, bill payment, recharge, stop payment of a cheque, ordering a new card or cheque book, requesting for statements, blocking cards, and generating debt and credit card PINs (personal identification number).
Banking through an app may have some restrictions, depending on the bank. Some banks may not allow blocking a card, while others may not have the option to request account statements. However, all the basic services are available on the apps, too. Federal Bank, for example, offers a host of services on netbanking, but some of them are not available on its mobile app. “As of now, we don’t have stop cheque and request for new card options on the app," said Jithesh P.V., deputy vice-president and head of digital at Federal Bank.
Also, some banks may have some restrictions on the value of funds that can be transferred to prevent frauds. They may not allow transfers over a specific amount through Real-Time Gross Settlement (RTGS) for the first 24 hours, or not allow Immediate Payment Service (IMPS) transfer to new beneficiaries for a few hours after you add them.
On 23 March, the Insurance Regulatory and Development Authority of India announced some relaxations for policyholders. The regulator asked life insurance companies to “enhance" the grace period for policies coming up for renewal by an additional 30 days, if the policyholder makes a request. The same will apply for health insurance policies. Insurers have also been directed to settle claims related to Covid-19 “expeditiously".
Insurance companies have been encouraging customers to use digital channels. Some insurers such as ICICI Prudential Life Insurance Co. are also offering WhatsApp services. Policyholders can place service requests through WhatsApp, mobile apps and via email.
Most insurers now allow customers to digitally access policy information, update details (contact information and nominee), change standing instructions and so on. Some private insurers even allow annuity customers to digitally verify their existence and continue to get their funds in their accounts.
If you are planning to buy a new health or life insurance policy in the wake of Covid-19, it’s possible to do so online. However, whether a policy would be issued online or not depends on its value and the past medical history of the individual.
Some companies have, however, taken measures to issue even high-value policies without medical tests. “You can get up to ₹2 crore worth of life insurance from some of the top insurers without medical test, and health insurance up to ₹1 crore," said Santosh Agarwal, chief business officer, life insurance, Policybazaar.com, an online marketplace for insurance.
For life insurance, the companies look at credit score and income as their experience shows that those with better financial health and income would also take care of their health. For health insurance, companies rely on doctors’ consultation over the phone. According to their research, customers are more open when a doctor is talking to them. “The results are better than even medical tests," said Agarwal.
In life insurance, many private companies allow for claims to be lodged digitally. However, there are still a few companies that demand a physical copy of the documents and the claim form.
For health insurance, the claims are cashless in network hospitals. If the person is admitted to a non-network hospital, in most cases, the claim must be lodged by sending the physical copies of reports to the insurer or the third-party administrator.
MUTUAL FUNDS AND NPS
Those who are investing in mutual funds through their banks or advisers can call them up for any service request. The same is true for existing customers already using digital channels.
However, there are multiple options for first-time investors who want to opt for mutual funds in falling markets. There are several online platforms and mobile apps you can use, including PayTM Money, Mobikwik, Zerodha Coin, Kuvera, Groww and Scripbox.
The onboarding for most of these apps is simple, and an individual can start investing immediately. “Even if a person has not done the KYC (know your customer) formalities before, it can be done through apps instantly. The process is paperless. It takes about seven working days to process the KYC. However, a person can invest even while the KYC is under process," said Lalit Keshre, co-founder and chief executive officer of investment platform Groww.
For the National Pension Scheme (NPS), existing subscribers can continue investing online using the Unified Payments Interface (UPI). Those who want to open a new NPS account can do so online on to the National Pension Trust website (www.npstrust.org.in)
Most of the essential financial services are now available on digital platforms. Even for first-time users, signing up and onboarding is now easy and paperless.
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