mPIN means Mobile Banking Personal Identification Number. It’s a 6-digit passcode you must enter each time you want to conduct transactions. Customers appreciate the mPIN because of the ease of making a transaction. In addition, the mPIN works well for confirming a person’s identity.

What is UPI?

The Unified Payments Interface (UPI) is a form of payment introduced by the National Payments Corporation of India (NPCI) to facilitate a digital economy. 

What Makes UPI Different From Traditional Transaction Methods?

Without the need to memorise IFSC codes and bank details, UPI offers consumers a reasonably straightforward way to make transactions at will.

UPI Registration Process:

Here are the steps to register on a UPI app:

1. Download an app.
2. Complete the registration details, including your name, virtual ID, password, and bank details. 
3. You can link multiple bank accounts based on the app you have downloaded.
4. Finally, create an mPIN, meaning receive the 6-digit passcode. 

How Can You Generate an mPIN?

You can generate your mPIN/UPI PIN by taking the following steps:

1. First, click the “Create/change mPIN” option.
2. Enter your debit card expiry date and the relevant field’s last six digits. Next, enter the OTP pin you received on your registered number. 
3. Enter the desired mPIN and click “Submit”.

That leaves you with a notification on whether the PIN change has been accepted or declined. You cannot make transactions without this pin. So if your phone reaches a fraudulent person, you can be notified and freeze the activities.

Some of the best UPI apps to send or receive money digitally are:

1. Google Pay: is a Google Inc service built by NPCI (National Payments Corporation of India). It is partnered with most of the central banks in India and is thus accessible to most users.
2. SBI Pay: is a State Bank of India-developed UPI-based payment platform that customers can use for safe and quick fund transfers. It is also known as BHIM SBI Pay.
3. Amazon Pay: is a BHIM UPI-enabled extension of Amazon India that enables users to make payments directly on the Amazon mobile app and earn rewards up to Rs. 350.
4. PhonePe: is a BHIP UPI-enabled mobile app used for cashless/card-less transactions.

Who Can Use UPI, and When Can They Use UPI?

Anyone with a registered bank account can use UPI as and when they like.

This payment mode functions outside banking hours and does not have a minimum transfer limit. 

You can use UPI with great freedom to pay local vendors, transport, clear utility bills, make purchases online, and make remittances.

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The credit limit of a credit card refers to the maximum amount of credit a bank or other lender will extend to a customer. The credit limit varies depending on the issued card type and the customer’s eligibility.

To help you understand in a better way, here’s a credit limit example:

When you were given an XYZ company credit card, you were informed how much you could spend. Let’s say that the instruction states that you are allowed to spend 1 lakh on your expenses. This means that the customer’s credit limit is set at Rs. 1 lakh, and any payment that exceeds this limit will be declined.

Let’s understand in detail how a credit card limit works.

How Credit Limit Works?

When managing a credit card, it’s essential to understand better how credit card limits work to avoid any penalties and financial losses. Financial authorities such as banks, alternative lenders, and credit card companies decide the limit.

The financial institution uses a customer’s income, employment history, loan repayment history, and credit history to determine the appropriate credit limit. The credit limit increases in direct proportion to credit history. 

For instance, banks or lenders won’t impose a higher limit on borrowers who lack the means to repay.  In such circumstances, the initial limit may be low, but if a bank ultimately sets a high credit card limit, the financial institution considers them low-risk borrowers.

A borrower’s credit limit may change over time. If customers make payments on time and keep credit utilisation low, banks or credit card companies may increase the credit limit. Conversely, the credit limit may be reduced if a customer has a high credit utilisation.

These aspects are essential for borrowers so they don’t accidentally exceed it and damage their credit score. 

How do Banks Determine your Credit Card Limit?

When your application reaches a financial institution, the issuer will review your credit history and income to determine how much credit to extend to you. Issuers want to know that you can repay any credit you’ve been given and that you’re financially prudent.

Here’s how they determine the credit card limit:

1. Payment history

The first concern is a customer’s propensity for timely payments. A credit card may not be issued to customers if the institution views them as high-risk borrowers due to past payment defaults or large debts.

2. Debt-to income ratio 

The financial institution will verify a customer’s ability to repay the credit. So, if the debt-to-income ratio is 35%, the institution issues the credit card quickly. However, if the ratio is 50% or higher, it might be more difficult for the customer to get approved for a credit card.

3. Age 

If a customer is young and has not made any payments, the issuer will either not issue the card or set a lower credit limit. The minimum age to apply for a credit card is 18 years. 

4. Current Credit Limits

If a potential customer already holds a credit card from another company, the institution checks the customer’s credit score and assesses whether or not he is a low-risk borrower.

Over time, the credit card limit might change. The main determinants are the borrower’s history of timely payments and how frequently he uses his credit card.

How to Increase Credit Card Limit

To raise your credit card limit, you need to be a loyal customer for at least six to twelve months. Additionally, you might be asked to provide more details about your income and debts.

Here are four things you can do to raise your credit card limit:

1. Ask the issuer to increase the limit

Depending on your justification for the request, most banks will increase your credit card limit if you ask them to. You can submit a request through net banking or by going to a bank branch.

2. Apply for a new credit card

If you currently have a credit card from XYZ company with a lower limit, you can apply for a card requesting a limit higher than the current one. If the credit score is good, banks will approve your request. 

3. Use your credit card wisely

Maintaining a good credit score is among the effective strategies. This is possible if you don’t completely exhaust your credit limit. To improve your chances of the bank approving your request, keep at least 10% of your credit limit available.

4. Pay your bills timely

If you consistently make credit card payments, the bank will perceive you as a low-risk client and make offers to raise the credit limit.

Benefits of Increasing Your Credit Limit

But why would you want to increase the credit limit? The below benefits will help you understand it better:

1. Improves your credit score

One of your credit score components is the credit utilisation ratio, which measures how much credit you use to your credit limit.

Keeping a higher credit limit and maintaining a minimum available balance on your account will demonstrate your responsibility, raising your credit score.

2. Financial flexibility 

If an institution sets a higher credit card limit, you’ll have more room to make purchases on your credit card without maxing out or worrying about your balances getting too high. 

3. Helps rebuild your credit

Suppose you’ve had a history of financial difficulties that resulted in bad credit scores. In that case, a higher credit limit may convince creditors that you’re serious about improving your credit and are using your card responsibly.

4. Low-interest rates

A higher credit limit also helps you qualify for lower interest rates on loans and credit cards in the future.

5. Perks and additional benefits

If you have a lower credit limit, banks might not give you additional benefits with a credit card. The likelihood of receiving perks and additional benefits rises with a higher limit.

What is the difference between Total credit limit and Available credit limit?

Total Credit Limit

The total credit limit is the maximum amount of credit a financial institution has issued to a borrower. 

Available Credit Limit

The portion of the account’s total credit limit that has not yet been used is the available credit limit.

For example, if a borrower has a total credit limit of INR 15,000 and has spent INR 5,000, the available credit limit stands at INR 10,000.

FAQs Related to Credit Card Limit

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Full-form of PAN : Permanent Account Number
PAN Number is a 10-digit alphanumeric Permanent Account Number provided to all Indian taxpayers. It is issued in the form of a laminated PAN Card. The Indian Income Tax Department issues it under the Indian Income Tax Act, 1961. The Central Board approves the PAN for Direct Taxes (CBDT).

PAN cards are computerised systems that record all of the tax-related data of a person or organisation against that particular PAN number. This information can be recorded against a person’s or corporation’s PAN number. Two taxpaying entities cannot possess the same PAN Card. A PAN card is required for any major financial transaction, such as opening a bank account or purchasing or selling assets. This is why the PAN card offers the account holder’s information uniquely.

What kind of information is on a PAN Card?

Details in PAN card includes

• Name of the cardholder (individual or business)
• Father’s name of the cardholder – Required for individual cardholders
• Date of birth – The date of birth of the cardholder, if an individual, or the date of registration, if a company or firm.
• The Individual’s Signature on the Card — The Personal Identification Number (PAN) card contains the individual’s signature, which is necessary for all financial transactions.
• Individual’s Photo – PAN card serves as a photo ID. There are no photographs on the card in the case of corporations and businesses.

No photos or father’s name will be included on a PAN card issued for business purposes. In addition, the cardholder’s date of birth is changed to reflect the date the company was registered, and the recipient’s name is changed to reflect the name of the company.

Sample of PAN Card

General Uses Of PAN Card

• A PAN card can be used as proof of identity anywhere in the country because it has your name, age, and picture.
• The PAN is the most effective way to trace your tax payments. Otherwise, you may be obliged to pay it many times due to the inability to verify your tax payment.
• Since each PAN is unique, its misuse for tax avoidance or other fraudulent activities is nearly impossible.
• Utility connections, including those for electricity, telephone, liquid petroleum gas (LPG), and the internet, can be secured using a PAN card.

Who needs a PAN number?

According to the Income Tax department, people who get a salary, even if they don’t pay income tax, and business owners whose sales total more than Rs 5 lakh must get a PAN number.

Why do you need a PAN number?

The department of Income Tax has made the Permanent Account Number (PAN) mandatory for all transactions. PAN number is also required to open a bank account, obtain a loan, travel abroad, and engage in stock market operations. Numerous other financial operations, including confirming bank accounts, the receipt of numerous financial credits, the purchase of luxury consumer goods, international travel, the sale of real estate, the trading securities, etc. A PAN card is a widely accepted form of picture identification by public and private sector organisations in India.

What are the PAN Card eligibility requirements?

U/S139A of the Income Tax Act provides a list of eligible organisations for a PAN card under Section 139A.

• Any individual whose annual income exceeds the threshold for tax-exempt income.
• A business owner whose annual revenue exceeds Rs.5 lakh
• Each Hindu Undivided Family (HUF) where the Karta or head of the family is the signatory.
• Any organisation, including single proprietorships, LLPs, AOP/BOIs, etc.
• Any charity group, trust, or organisation.

A PAN card must also be obtained for any minor who may become a future taxpayer. This shows that there are no barriers to applying. Almost all Indian nationals and non-resident Indians must obtain this document.

With so many distinct types of PAN card holders, however, authorities have developed a variety of classifications to classify PAN card types.

What are the different kinds of PAN Cards?

Different types of taxpaying entities have different PAN cards. The 4th character of each PAN can be used to identify this category, which differs for different entities. Here is a brief analysis of the various alphabets and their respective meanings.

G: Government Institution

J: Artificial Juridical People

P: Individual

C: Corporation

A: Association of Persons (AOP)

E: Limited Liability Partnership (LLP)

B: Body of Individuals (BOI)

F: Partnership Business

T: Trust

H: Hindu Undivided Family (HUF)

L: Local Authority

How can I submit my application for a PAN Card?

The following is a detailed overview of the steps involved in submitting an online application for a PAN card.

Step 1: Visit the official UTIITSL or NSDL website.

Step 2: Go to the menu “Apply online” and click it.

Step 3: Select Form 49A or 49AA from “Application Type.” First is for Indian applicants, second for foreigners.

Step 4: Choose your identity type from the list.

Step 5: After completing the remaining required fields, click the “Submit” button after entering the verification code.

Step 6: Click “Continue with PAN Application Form”

Step 7: You will be redirected to your chosen application form. Fill this out with correct information.

Step 8: Upload documents and click “Submit.”

Step 9: Pay for the PAN card processing fees and download the receipt. Then, click “Continue.”

Step 10: After authenticating your Aadhaar number, you’ll receive an OTP.

Step 11: Complete your application by entering the OTP.

After following the steps, you’ll receive a PDF acknowledgement slip. Don’t be worried if it asks for a password to unlock because your birthday is in the DD/MM/YY format.

Documents needed to get a PAN Card:

When filing for this key document, different types of taxpaying organisations have different requirements for the mandatory documents submitted. Use the table below to find the documents you need for your category.

A PAN card application can’t be changed once you’ve collected all the necessary paperwork and understand the application process.

However, once the application has been submitted successfully, you may prefer to keep track of the status instead of waiting.

Advantages of PAN Card:

A PAN card is required to ensure that the transactions go through smoothly and legally when selling or purchasing assets worth more than five lakh rupees.

• Both private and government banks need a PAN card to open an account in a bank.
• Phone connection requires a PAN card.
• A PAN card is necessary to apply for a new gas connection.
• Hotels and restaurants require PAN cards for one-time payments of over 25,000 rupees.
• A PAN card is essential to pay more than 25,000 rupees in cash while travelling abroad.

Having a PAN card could prevent fraudulent transactions from being processed. In addition, it eliminates tax avoidance and increases buyer-seller transparency.

Conclusion

Obtaining a PAN card is required if you are a resident of India and make financial contributions to the country’s economy. A PAN card represents a Permanent Account Number. If you want to file your taxes, you’ll need to have this document on hand. Remember that accuracy is vital while filling out and submitting forms for your PAN card. Keep this guide available to avoid making any mistakes.

FAQs on PAN Card:

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Several security measures are used while using plastic money. Entering the CVV number of a credit or debit card is one of them. 

In this article, we discuss what a CVV number of a debit card is and what its significance is. We will also talk about other security aspects related to CVV code on a debit card.

What is a CVV Code on a Debit Card?

Card Verification Value or CVV code is a three- or four-digit code found on the back of your credit card or debit card. Every debit card has a different CVV number, and only the debit card owner knows this number. Debit card CVV is sometimes called Card Verification Code (CVC) or Card Security Code (CSC) as well. It is also called the CVV2 number in some cases as it is generated using second-generation key generators and hence is harder to guess.

The CVV code of a debit card is provided to enable users to perform online and phone transactions in a secure manner. Just like every card number is unique, a unique CVV number gives you an extra degree of protection against fraud while using the debit card. Thus, when you cannot present while making the payment, the CVV code on the debit card will help you establish your identity during an online transaction.

When you swipe your credit or debit card during a transaction, the card reader reads the magnetic stripe at the back of your card. The magnetic stripe is an important component of a credit or debit card because it contains a lot of information about the cardholder. The magnetic stripe and the CVV number provide a dual security level for your transactions.

Where Can I Find My Debit Card’s CVV Number?

On most credit and debit cards, including MasterCard and Visa cards, you will find the CVV code printed on the back of the debit card beside the space provided for your signature.

Parts of CVV on a debit card

A CVV consists of two main components:

1. Black magnetic stripe

The black magnetic stripe at the back of your card contains essential information about the cardholder. If it gets scratched or damaged in any manner, a card reader cannot read your card. When you swipe your card through a card reader, it retrieves all the required information about the transaction and the cardholder through the magnetic stripe.

2. CVV number

The CVV number on a debit card is a three- or four-digit number that is printed behind your card. Whenever you make an online purchase, you need to enter the CVV number along with the debit card number and expiry date to establish your identity. When you swipe your debit card through a card reader, the reader reads the numbers to ensure that the magnetic stripe information and the debit card number combination match.

Is My Debit Card CVV Code Unique?

Every credit and debit card has a unique CVV code. The bank issuing the card assigns these randomly generated numbers to your card. 

What Other Information Can I Find on My Debit Card?

You can find the following information on your credit or debit card:

1. Credit Card or Debit Card Number (usually 12 to 16 digits)
2. Service code
3. The expiry date of the credit or debit  card
4. Three-digit unique code generated by the bank. Sometimes, the bank could issue 4-digit codes also.

It is, thus, of utmost importance that you do not share the above information with anybody. They are provided to ensure secure transactions.

How is CVV on Debit Cards Useful?

When used correctly, a CVV code on a debit card can protect you against fraud. If the magnetic stripe is changed, a card reader will be unable to read the data. Every transaction requires the exact magnetic stripe data and CVV code combination. In case of any changes, the reader will declare your debit card as “Damaged” and stop the transaction.

PIN and CVV on Debit Cards – Are They Same?

PIN (Personal Identification Number) and CVVs are different entities. A debit card’s CVV helps a card reader establish the credentials of a cardholder. You are required to enter your PIN while withdrawing money at an ATM, during transactions at a POS system, and during online transactions. While the CVV is present on the debit card and is known by the issuing bank as well, your PIN is completely secret and only you know it. 

Just as you must never share your debit card details with anyone, you must also never share your PIN with anyone. When someone asks for a CVV number, do not share its details with them.

How Does a Debit Card’s CVV Number Ensure Secure Transaction?

When you shop on an online e-commerce site, it asks you to enter the CVV number on your credit or debit card when you check out. It does not save your debit card’s CVV information. Every time you make a purchase, you have to enter your CVV number. This step is to ensure additional safety against online fraud.

Similarly, when you swipe your debit card through a card reader, the card reader confirms the debit card data from the magnetic stripe and the CVV number. It does not copy or store the data.

CVV code on credit and debit cards gives you a two-factor authentication facility which improves the scope of secure transactions. You have to enter the debit card number, the expiry date, and the CVV number for online transactions to prove your identity and the fact that you are the cardholder.

If someone sees your credit card or debit card number, they will not be able to find the CVV number from it. It is unique and randomly generated. If someone tries to change the data on your debit card’s magnetic stripe, a card reader will not be able to read the debit card. It will show up as “Damaged”, hence stopping further transactions.

Thus, credit cards and debit cards provide various levels of security to ensure secure transactions. Unlike cash, you need not worry too much if you even lose your credit or debit card. There are multiple authentication steps to cross before someone can access your funds.

Online transactions require you to enter the CVV code on your debit card to authorise your purchase. However, they are legally not allowed to save or copy this information. Even if you have saved your credit or debit card details on an e-commerce site, the site will not be able to read your CVV number. Thus, even if the main server is hacked and your debit card data were stolen, your debit card will be of no use as they won’t have your CVV number.

How to Prevent Online CVV Fraud?

All e-commerce sites ask you to enter the CVV code on your debit card before proceeding with a transaction. This provides an extra layer of security for online transactions. However, expert cyber hackers might steal your CVV code as well and undertake fraudulent activities.

You can prevent such occurrences by following these guidelines:

1. Do not save card data on e-commerce sites

Hackers can get the maximum amount of data by hacking an e-commerce site. It is always good to avoid storing credit or debit card information on these websites. Though it is more convenient and makes your shopping experience easier, it may lead to serious consequences later.

2. Check for safe sites

Every website comes with an HTTPS or HTTP link. Check the link bar for a lock symbol. If you can see a lock symbol on the extreme left of the link bar, it means the site is safe to browse. Always shop on such sites only.

3. Use password managers for unique passwords

One of the most common mistakes people make is setting the same password for multiple websites. Many times, the password is very easy, and anyone can guess it easily. To avoid this problem, you can use free password managers or generators to get unique passwords for different websites.

4. Avoid opening phishing content

Phishing is a method of acquiring a user’s important information without divulging the source. Hence, you will get a mail from some unknown user who will ask you to click on a link to proceed. These links are designed to take you to fake websites that can capture all your information. You cannot trace these emails back to a particular person in most cases. It is always better to avoid opening suspicious emails and messages.

5. Use a good antivirus

Good antivirus software prevents malicious content from entering your system and stealing your information. It also helps you safely navigate e-commerce websites without the fear of being hacked. Invest in good antivirus software to eliminate external threats.

Future Developments

In recent times, chip-based credit cards and debit cards have increased in number. These cards can change the internal code every time the card is used. Hence, it offers far more security than the usual magnetic stripe.

Upcoming technology also promises to bring changeable CVV codes for online transactions. In this method, the CVV code printed on the back of your card will periodically change after every few months. The card will use a battery which will allow this change. The changed CVV code will be then updated in the bank’s database so that the user faces no problem while making transactions.

However, this card will cost more due to the addition of batteries and the technology needed to update the database often. It is a matter of debate whether the amount of fraudulent activities outweighs the cost of making such a card.

Conclusion

Since the 2000s, the use of credit cards and then debit cards has increased manifold in India. Most people in urban areas carry a credit or debit card at all times. The introduction of huge e-commerce websites in India also promoted the use of plastic money.

While credit and debit cards make our lives easier by dispensing the need to carry cash around, they come with their own set of problems related to security.

Using the CVV on a credit or debit card correctly will help you bring down the amount of fraud significantly. 

FAQs on CVV:

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Cheques are one such instrument that can be used in multiple ways to make payments. If the customer sends us a cheque, the funds are credited to our bank on the cheque date. 

The term “Post Dated Cheque” or (PDC) refers to a cheque written by a customer for a date in the future. It is possible to encash or deposit a cheque before the expiration date specified on the cheque. 

What is a Cheque?

As a bill of exchange, a cheque must be drawn out to a specific banker and intended to be paid on demand. It can be in printed form or an electronic cheque.

In simple terms, a cheque is a type of bill of exchange that instructs the bank to transfer funds from one person’s account to the account of another person or company. The cheque is used to make safe, convenient, and secure payments.

A Cheque Contains

• The name and address on a cheque are normally found in the upper left corner.
• The cheque number, which may be seen in the upper- and lower-right corner portions of the cheque, is required for tracking purposes.
• Write the transaction date on the cheque’s dateline.
• Write the recipient’s name on the long top line of the cheque, commonly preceded by “pay to the order of.”
• It’s important to note that the payment amount will be written in two places on your cheque. You can write the amount in words and numbers here.
• Completing the Memo line in the lower left-hand corner is optional but preferred.
• You must sign a blank line at the bottom right of the cheque’s front.
• As a clerical convenience, when the bank processes cheques, they are printed with the digits at the bottom in magnetic ink.

Post dated cheque (PDC) Meaning

A cheque prepared with a future date is called a post dated cheque or PDC cheque. As a result, the date on the cheque is after the date the cheque was written. Even though the cheque has a future date printed on it, the cheque may clear (be paid out of) the bank account before that date is reached.

If you know that the person who will get the cheque won’t encash or deposit it before the date on the cheque, then post-dating a cheque makes sense.

Example of a Post dated Cheque

Suppose Jim has to pay a supplier INR 2,000 on 22d May for transactions he made 40 days ago. Since Jim lacks the funds to pay the supplier, he agrees to send the supplier two INR 1,000 cheques, one dated 20th June and the other dated 20th July.

The supplier undertakes to hold and deposit the cheques as specified. In addition, Jim ensures the supplier that his bank will pay the cheques on the specified dates.

When Jim’s PDC cheques arrive on 4th June, the supplier must not debit cash or credit accounts receivables because the dates on the cheques state that the cheques cannot be encashed before those dates. This feature allows Jim to issue a cheque but has control over when the supplier gets paid.

How Do You Make A Post dated Cheque?

Writing a PDC cheque is similar to writing a regular cheque. The only difference between a regular cheque and a post dated cheque is that the present date is replaced with a future date. Rest remains unchanged.

How to Use Post-date Cheques?

Post dated cheques are written primarily in one of the situations listed below.

• When there is insufficient money in your account right now, but you know you will at a later period.
• If you want to ensure the service provider or goods suppliers, you will pay them after the service or items are delivered. According to the service or product quality, the ultimate payment amount may be negotiable in such situations.
• Financial institutions employ PDC cheques to prevent loan defaults.

Everything you should know about post dated cheques

Post dated cheques that are presented to a bank before the date on the cheque are either returned with a post dated mark or held in reserve until they can be encashed. 

When a banker pays a PDC cheque and then dishonours a cheque that was supposed to be paid, it will be returned to the owner because of a lack of funds.

Therefore, the issuance or acceptance of post dated cheques is avoided. This helps avoid the possibility of a returned cheque owing to insufficient funds, which would involve additional fees. However, it involves inconvenience for the drawer, the drawee, and the payee.

Before the due date, the following effects are expected

• The drawer has the right to deny payment.
• The drawer may pass away or be psychologically ill.
• A garnishee order may have been placed against the drawer’s account.

Benefits of Using a PDC

• It functions like an instalment payment platform in which the payer is not required to pay the full amount at once or on the due date.
• It gives the payer some relief by delaying future payments till he has additional funds.
• It aids in the smooth running of business operations even though the owner lacks sufficient funds to pay suppliers.
• It acts as a binding agreement between the parties, stating that the deal will occur later.

Why Not Issue a Post Dated Cheque?

In truth, issuing a PDC cheque is not always the best course of action. Because you never know if you’ll be able to have funds in your account on the specified future date. 

In case of insufficient funds, the cheque might bounce when the recipient deposits it in the bank. This will not only result in additional fees from the bank but will also result in the loss of your reputation and the previously established relationship.

Most bank services are now automated, and banks rarely verify the date on a cheque. Occasionally, this may also result in a bounced cheque.

To issue a PDC cheque, you must also go through the time-consuming step of notifying the bank in writing of your objectives. In addition, each bank has a unique policy for monitoring and prohibiting premature payment.

Alternative Options for a Post Dated Cheque

A post dated cheque is your best option when you’re financially unstable because you won’t have to pay any additional costs. However, instead of sending a post dated cheque, try the following

• You can schedule payments using your bank’s online bill payment option, like online banking, mobile banking, etc.
• Enrol in automatic electronic payments only if you have faith in the payee. Businesses that are dishonest or disorganised may make illegal withdrawals from their account.
• If you need more time for funds to clear, contact your payee for a different payment date. Some billers are willing to work with you to establish a final payment that suits your financial flow.

 Legal Consequences of Dishonouring a Post dated Cheque

Section 138 of the Negotiable Instruments Act makes bouncing or dishonoured cheques a criminal offence punishable by jail time or a fine.

In the absence of a legitimate response from the responder, the interested party has 45 days to file a case.

Conclusion

Post dated cheques are ideal instruments when planned and used appropriately. They may also serve as collateral for short-term loans. They also help keep business activities running without shutting them down due to a lack of funds. From the payer’s standpoint, the best way to prevent payments from being released early is to notify the bank.

FAQs on Post Dated Cheque

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A cancelled cheque leaf confirms that the individual has a bank account and it prevents from being used for further withdrawals from the drawer’s account.

A cancelled cheque has the following components in it:

• Bank name
• Account number 
• Account holder’s name
• MICR code, IFSC code 

A cancelled cheque sample:

When do you need a Cancelled Cheque?

You will need a cancelled cheque under the following circumstances:

• Requirement of proof while creating an account with any bank, while applying for an insurance policy, a new Demat account, and withdrawal of PF.
• If you made a mistake when writing the cheque.

Things to be aware of while using a Cancelled Cheque

• On a cancelled cheque, always use black or blue ink. Other colours are not permitted.
• After using the cheque, shred it so no one can use it again.
• You can use the cheque several times.
• As long as the time details on the cancelled cheque remain valid, it is prone to fraudulent activities because it contains your account number, IFSC code, bank name and branch address, MICR code, and other information.

How to write a Cancelled Cheque?

Following are the steps to cancel a cheque:

Step 1: Remove a new cheque from your cheque book and cancel it.

Step 2: You must draw two parallel lines across the cancelled cheque.

Step 3: Write the term “CANCELLED” on the document in capitals between those two lines.

If the cheque contains an error, follow the steps from step 2 to cancel it.

Try not to make the following mistakes:

• Don’t sign or write anything on the cancelled cheque. There is no need to put an entry on the cheque because miscreants can fraudulently use the details and signature to withdraw money from your account because the cheque serves as proof of your bank account.
• Make sure you don’t cover important information on the cancelled cheque, such as the account number, account holder’s name, MICR code, IFSC code, address of the bank where the account exists, and so on.
• Hand over the cancelled cheque only to the person concerned, the reason being the misuse of these misplaced cheques. 

Uses of Cancelled Cheques

You can use a cancelled cheque in the following situations:

1. New Bank Account Opening 

Banks would ask for the submission of a cancelled cheque while someone opens a bank account to complete the account opening process.

2. Loan Applications

Every bank would need you to submit a cancelled cheque while applying for a loan.

3. EMI Payments

Financial institutions would want you for a cancelled cheque when you buy any item on an EMI basis.

4. Mutual funds

The investment organisation requires you to submit a cancelled cheque to verify your KYC details when you invest in mutual funds.

5. EPF withdrawal

The EPO(Employee Provident Fund Organization) would demand a cancelled cheque to confirm that the concerned individual is you and not someone else if you withdraw your Provident Fund (PF) offline.

6. ECS(Electronic Clearance Service)

Banks would require a cancelled cheque if you opt for the Electronic Clearance Service (ECS) to deduct funds from your account automatically.

7. Insurance

Insurance companies would ask for cancelled cheques while issuing an insurance policy, be it money back, term, endowment, or health.

8. DEMAT ACCOUNT 

The stock brokerage needs the submission of a cancelled cheque along with a form for opening the account and other KYC documents such as proof of identity and address at the time of opening a Demat account.

9. Know Your Customer (KYC)

For banks, a cancelled cheque is relevant in KYC to prove active participation in stock investments and mutual funds.

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What is UPI?

UPI is a digital instant payment system developed by the National Payments Corporation of India (NPCI), which is regulated by the RBI. It allows you to transfer money between two accounts. It uses the Immediate Payment Service (IMPS) infrastructure that allows interbank electronic fund transfer 24*7 right from your mobile device.

Important Features Of UPI

UPI offers many beneficial features

1. A user needs to provide their bank details only once while registering their UPI ID.
2. If users have accounts in different banks, they can operate these accounts using a single app.
3. A user can transfer up to INR 1 lakh in a single transaction.
4. A user can schedule transactions such as bills and rents for convenience.
5. A user can use UPI to transfer funds 24*7.
6. All UPI transactions are linked to a user’s Aadhar Card.
7. Each transaction occurs after multiple security checks.
8. A user can transfer funds with one click.

General Limit For UPI Transactions

The NPCI has stipulated a limit for UPI transactions. The current UPI transaction limit is INR 1 lakh. This means that you can make a UPI transaction of up to 1 lakh in a single transaction. 

In March 2020, however, the NPCI issued a circular stating that the UPI transaction limit is INR 2 lakh for verified merchants. Hence, you can transfer up to INR 2 lakh in a single UPI transaction. However, this increase does not apply to other peer-to-peer (P2P) transactions like NEFT.

Similarly, the total number of UPI transactions per day is typically limited to 20. This limit varies across banks. 

UPI Transaction Limit Bank-Wise

The NCPI mandated each bank to set its own UPI transaction limits. While some banks use this feature to allow their customers to transfer as many funds as they want (under INR. 1 lakh), some banks have reduced the transaction limit to protect their customers from illegal withdrawals in case of device theft. 

Hence, the UPI transaction limit is different for different banks. It could be INR 10,000 to INR 1 lakh. If your bank allows you to transfer INR 50,000 a day in not more than five transactions, you will not be able to exceed the amount or number of transactions.

UPI AutoPay Feature 

Most UPI apps have a provision that allows users to schedule their payments. NPCI created this feature to help UPI users pay recurring payments such as electricity bills, EMI, OTT subscription charges, rent, etc. This feature is called AutoPay. 

The UPI and NPCI websites have not declared whether or not these charges will be included in the UPI transaction limits.

UPI Transaction Limits On Different UPI-Enabled Apps

As with banks, different UPI apps have different transaction limits.

• UPI Transaction Limit On Google Pay

Google Pay or GPay is one of the most commonly used UPI apps. These are the different UPI transaction limits in this app:

• A user can transfer up to INR 1 lakh in one day in a single transaction.
• A user can transfer funds up to 10 times across all UPI apps.
• A user can request up to INR 2,000 from other parties.

• UPI Transaction Limit On Phonepe

PhonePe is a popular UPI app that allows instant payment across different channels. These are the different UPI transaction limits for this app:

• A user can transfer up to INR 1 lakh in one day in a single transaction.
• A user can transfer funds up to 20 times across all UPI apps.
• A user can request up to INR 2,000 per day.

• UPI Transaction Limit On BHIM App

The Government of India launched the Bharat Interface for Money (BHIM) app to facilitate easy fund transfers. It allows fund transfers even if the users have a basic mobile device that does not support internet connectivity. Here are the different UPI transaction limits for this app:

• A user can send up to INR 1 lakh per day in a single transaction.
• A user can transfer funds up to 10 times per day across all UPI apps.
• In case of offline transfers, the receiver should also have an active BHIM account.

UPI has made everyone’s life extremely easy. There is no need for you to carry cash every time you step out or cancel a purchase because you do not have enough liquid cash. Within the UPI transaction limit, you can perform any transaction. 

Moreover, with the UPI AutoPay feature, there is little chance of you having to miss out on a payment. This will enable you to enjoy uninterrupted services. 

UPI, along with NEFT and RTGS, has revolutionised the world of money transfer. It is also a matter of pride that India is the first country that has implemented UPI and has advanced this platform in so many ways. When used properly, UPI can grant you unending freedom.

FAQs on UPI transactions

What permissions are required to use UPI apps?

You must have a bank account with a registered bank on the UPI network. Your mobile number should be registered with the bank. When you download a UPI app using a device that has the same phone number, the bank will send you a One-Time Password (OTP). After you verify the app using the OTP, a Virtual Payment Address (VPA) will be created.

Is a separate KYC required to use the UPI feature?

UPI does not need a separate KYC.

Can I reduce the existing UPI transaction limit?

Certain banks allow their customers to limit their transaction amount and the number of transactions. You can find this out by visiting your bank’s website.

What are the charges levied on the UPI transactions?

There are no charges for UPI transactions.

What is the UPI limit for international transactions?

You cannot make international transactions on UPI platforms.

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After demonetization, the transactions rose in digital form via different payments apps such as Paytm, Google Pay, Phone Pe, etc. For each user that signed up on these platforms, they received a user name and ID to better locate the user and the transactions taking place. This gave rise to Virtual Payment Address and the widespread use of the term VPA. 

What is VPAs, the full form of VPA and how are they important? 

VPA stands for Virtual Payment Address and that is the full form of VPA. 

Virtual Payment Addresses, more commonly known as VPAs are virtual addresses that are given to individuals when they sign up on a digital payments app such as PayTM, Phone Pay or Google Pay. the idea behind a Virtual Payments Address is to make the transactions of sending and receiving money easier and replace the bank account details. 

When one needs to send money to another bank account multiple bank details such as account number, account name, IFSC Code, branch name, etc. are needed can be a tedious process and prone to error. To reduce the errors and the cumbersome process, a technology called the Virtual Payment Address was introduced which is a single line address to identify a person and send money to their bank account. 

With the use of a Virtual Payment Address, VPA individuals can send and receive money without needing the bank details of the opposite person and the entire transaction can be completed in under a few seconds. 

The importance of VPA – Virtual Payment Address

Because of the invention of VPA, it has become easier to transact with money with lesser details needed. The importance of the virtual payment address, VPA is also some of the major benefits of the VPA and how they are better than traditional payments and banking systems. Because of these reasons, some individuals and businesses prefer the VPA over the traditional payments method. 

Some of the importance of the Virtual Payment Address is: 

1. Less prone to errors 

While entering bank account details, since so many details, numbers and alphabets are required, the details entered could have mistakes in them causing errors and delay in transactions. Because of VPA, this issue is eradicated since a virtual payment address is usually easy and an online line address. 

2. Swift and quick transactions 

Many times for bank transactions, one needs to add the beneficiary and is only able to transfer the money 24 hours post. With the UPI and digital platforms, and the use of virtual payment addresses, these transactions can happen without a few minutes if not a few seconds. This stops the delay in transactions and assure swift movement of money. 

3. Money can be transferred anytime 

Be it a weekend, weekday, bank holiday or any other day of the week, the payments are never down and one can send payments anytime, anywhere. This is a huge advantage compared to the traditional banking system as banks are shut on certain days of the year and even after working hours. 

4. Economical and can be used by anyone 

Some bank transactions have a minimum account that needs to be transferred or have high transfer fees due to the nature of the transaction. This case does not arise with virtual payment addresses and UPI transactions since they do not have any minimum transfer amount and all transactions are free of cost. 

How to get VPA and what all are the requirements for it? 

To get a Virtual Payment Address, one first needs to have the Unified Payments Interface [UPI] app downloaded. Only once the UPI app is downloaded it is possible to get the VPA for an individual. 

Follow the following steps to know how once gets the VPA 

• Download the UPI app on your mobile phone and link the app to the bank account of your desired choice and the mobile number that is linked with the bank account and the one that you will use for future purposes. 
• Once the app is downloaded, link your bank account and enter all your details such as bank name, branch, IFSC code and the other requirements needed by the app. 
• There will be a mobile verification process that will send an OTP to your linked number and a security question that will need to be approved. 
• Once a bank account is done, a new user is created and they will receive their Virtual Payment Address which usually looks like this – johndoe@okhdfcbank 
• Some other examples of Virtual Payment Addresses are george112233@upi, seema123@okaxisbank and so on. 
• A VPA example is usually the name of the person followed by the ‘@’ sign and then usually the bank name. Because of this, a VPA is very easy to read and understand and hence is not prone to errors. 

These are some of the requirements and the steps that are necessary to carry out when one signs up on a UPI app and receives a new Virtual Payment Address. This VPA can then be used for all UPI transactions whether they’re done from Paytm, Phone Pe, Google Pay as the bank account linked to the VPA is still the same.

After one has received their VPA how can one send and receive money via VPA?

Sending and receiving money via Virtual Payment Address, VPA is very easy and can be learned by anyone in just a few simple steps. 

To send money and use the Virtual Payment Address, one needs to do the following steps: 

• Enter into the UPI app with your login details and the verification steps needed
• Choose fund transfer under the UPI option. Please note only during the UPI method will you need to use the VPA and hence if you want to send money via the VPA method, you need to choose UPI. 
• Once you have selected the option, enter the beneficiary and the beneficiary’s Virtual Payment Address, the amount and any remarks, if any. 
• Many times, an individual can have multiple VPAs and they then need to choose the VPA they want to send the money from. 

This is the entire process of sending money via Unified Payments Interface, UPI and hence using the address of the Virtual Payments Address, VPA. 

Frequently Asked Questions, FAQs about Virtual Payment Address, VPA

1. What is the full form of VPA? 

VPA stands for Virtual Payment Address and is used widely for digital payment and transactions all over the country. 

2. Can anybody have a VPA? 

Yes. Once an individual has downloaded the Unified Payments Interface, UPI app, they get a Virtual Payment Address as their VPA id. This VPA id is then linked to the bank account which is used for digital transactions of payments. 

3. Is it possible to have more than one bank account? 

Yes. an individual can have more than one VPA account. Just how an individual can have multiple bank accounts, the same way an individual can have multiple VPA accounts which then need to be linked with other bank accounts and so on. 

4. Once a VPA is done, do you need other bank details to transfer money? 

No. Once you have linked your bank details to a VPA all the details are entered on the app, no other bank details are necessary for the transfer of money and one can transfer money with just the VPA address given. 

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A bank reconciliation statement or BRS summarises a business and banking activity that reconciles an entity’s bank account with its financial records. 

The statement defines the withdrawals, deposits, and other tasks affecting a bank account for a specific period. A bank reconciliation statement(BRS) is a beneficial financial internal control tool to prevent fraud. 

This blog summarises everything you need to know about bank reconciliation, including all specifics on the bank reconciliation statement.

Why is a Bank Reconciliation Statement Required?

You can use a BRS or a bank reconciliation statement for the following reasons given below:

• There is a difference in the fate of cheque credited and cheque deposited.
• There are cheques issued or received without bank clearance.
• There are errors in the credited or debited transactions from the bank side.
• The date of publishing the cheque towards payment differs from that of debiting.
• You made mistakes in recording the bank transactions in books of accounts, just like banks.

A bank reconciliation statement(BRS) avoids all the problems mentioned above. In addition, these would eliminate the mismatch in the actual bank balance and the closing bank balance in your books of accounts before the complete process of bank reconciliation.

What Are the Prerequisites for Creating a Bank Reconciliation Statement?

You need the following to form a bank reconciliation statement(BRS):

• The previous month’s statement
• The current statement

Note:

As transactions can still happen on the actual statement date, the accountant typically creates the bank reconciliation statement using all the previous day’s transactions.

Creating a Bank Reconciliation Statement

Have a look at the steps involved in the bank reconciliation statement, which are as follows:

Gather All Records

To reconcile your data and create a bank reconciliation statement(BRS), you will need two sets of records:

1. Your bank records
2. Your company’s records

Your bank records information is available via online banking, a bank statement, or a bank that exchanges data with your accounting software.

Your company’s records will be in your company’s ledger, generally known as its books, stored as a spreadsheet, logbook, or accounting programme.

Check Your Ledger for Mistakes

Go through your ledger and rectify errors before the completion of your bank reconciliation, meaning:

1. If you missed deducting bank service charges like late payment, account maintenance, and transfer, go ahead and deduct them from the ledger.
2. Suppose you posted a payment that did not reach completion and had amendments later. Check them before adding them to the bank statement. 

Compare Your Deposits

Initially, compare the records in the ledger cash account and the company’s bank statement during bank reconciliation. Then check the matching records whether all the records in the ledger match with the bank account statement. 

Afterwards, perform the following before finishing with your BRS or bank reconciliation statement:

1. Check that your bank statement includes all of your deposits and withdrawals. If something is missing, try to reenter it.
2. Compare your books to your bank statements to ensure the correct accounting of every transaction.

Change the Bank Statements

Change the balance on your bank statements to reflect the updated balance by adding deposits in transit, subtracting outstanding checks, and adding/deducting bank errors.

• Deposits in transit are sums received and recorded by a business but not yet recorded by the bank. 
• Outstanding checks have been written and recorded in the company’s cash account but not cleared by the bank. 
• Bank errors are inaccuracies committed by the bank during the creation of the bank statement and obtained by comparing the general ledger of the cash account to the bank statement.

Make Changes to the Cash Account

Adjust your business account’s cash balances by adding interest or subtracting monthly charges and overdraft fees while performing bank reconciliation.

The charges you need to consider are:

• Bank costs are service charges deducted by the bank to process the business’s checking account activity. 
• Non-sufficient funds (NSF) arise when you request a withdrawal from your bank by cheque or pre-authorised debit, and your account does not have enough funds to pay it.
• Cash Account Errors are inaccurate amounts you enter or omit from the records when there are errors in the cash account.

Evaluate the final balances

After revising the balances according to the bank and the books, the corrected amounts should be the same. However, you must go through the bank reconciliation procedure again if they are still not equal.

Once the balances are equal, firms need to produce journal entries for the modifications to the balance per book.

Bank Reconciliation Format

Check out the bank reconciliation statement(BRS) format given below:

Bank Reconciliation Format as on.

Points to Remember:

To solve the problems on Bank Reconciliation Statement, you should note the below-given points:

1. The heading of the format will appear as “Bank Reconciliation Statement as on ………………….”
2. You must group every item you add to the statement, display it in the inner column, and then bring the total to the outer column for addition (B).
3. You must group every item you deduct in the bank reconciliation statement in the inner column and display the total in the outer column for deduction (D).
4. A favourable balance is nothing but the passbook will have a credit balance, and the cash book will have a debit balance.
5. An unfavourable balance or bank overdraft is nothing but the passbook having a debit balance and the cash book having a credit balance.

Below given are the transactions that generally appear in bank statements but not in the cash account of the company:

• Interest Income: If the organisation has obtained any interest income on its bank account, the company’s cash account has the entry before issuing a bank statement.
• Service Charges: these charges the bank has deducted are not generally known to the company before issuing a bank statement. 

A few of my cheques are not showing in the bank reconciliation statement. What should I do?

Suppose your deposits or cheques are unavailable in the bank reconciliation statement, proceed as follows:

• Verify whether you assigned the transaction to the right GL account number (Cash Account).
• Verify that your chequebook has the right GL account number (in the GL account #field on the General button of the Setup>Checkbook dialogue).
• Enter transactions by clicking F5 from the Tasks in the Transaction Entry window.
• From the window of Bank Reconciliation that holds the bank reconciliation statement, select Assign Orphan Checks from the F3 or the Edit menu or right-click the context menu and view if the checks are displayed. If yes, then apply them to the right chequebook. 
• If the transactions are still not present in the bank reconciliation statement under the Bank Reconciliation window Tasks, select Rebuild Uncleared Transactions from the F3 or the Edit menu or right-click the context menu. 

The post Bank Reconciliation Statement appeared first on MyBillBook.

Full form of UPI is Unified Payment Interface.

What is UPI?

UPI is a one-stop shop for all of your banking needs. You can quickly and easily send and receive money using a UPI ID and PIN. With real-time bank-to-bank payments, you can make transactions using just a mobile number or virtual payment address.

Who initiated UPI?

The National Payments Corporation of India (NPCI), the Reserve Bank of India, and the Indian Banks Association(IBA) launched UPI.

NPCI is the company that manages the RuPay payment infrastructure.NPCI also manages the Immediate Payments Service (IMPS), and the upgraded version of IMPS is known as UPI.

What are UPI ID and PIN?

A bank account needs a UPI ID and a unique identity to send and receive money. A 4-digit personal identification number known as the UPI PIN must be entered to authorise a money transfer via UPI. The account holder has the option of selecting the PIN.

How does UPI work?

UPI is a quick way to send money to a person. You do not have to remember much information like the account number and bank name. Instead, you can send money by knowing the person’s name, UPI ID or mobile phone number registered with the bank. 

A UPI ID often starts with your cell phone number, the @ symbol, and your app. For instance, if your mobile number is 89xxxxxx50 and you are using the Phone pe app, the UPI ID can be ’89xxxxxx50@ybl’. 

Here are the steps on how to set up a UPI id:

• Enter the bank account details on the app
• The app will send an OTP to your registered mobile number to confirm that you are an authorised user.
• A PIN creation prompt will appear once you enter the OTP.
• This completes the registration, and you can now send and receive money from anyone.

What features and benefits does UPI offer?

• UPI is safe because it uses multiple layers of security, including a PIN, to protect your money. 
• Making payments online is easier because you can make payments almost instantly. 
• It is convenient, and you don’t have to remember any account number. You can make payments using your mobile phone and just need a UPI id.
• It’s versatile because you can use it to pay for a wide range of things, including utility bills and online shopping. 
• It is affordable because there are no transaction fees.

Is UPI secure?

Transactions using UPI use a highly secure encryption format that is difficult to mess with. The NPCI IMPS network daily processes transactions worth around Rs. 8,000 crores. The use of this technology is anticipated to expand significantly.

Every transaction is verified using a two-factor authentication system comparable to OTP. OTP will not be utilised for validation; UPI PIN will be.

Banks that support UPI

The following are the central banks that offer UPI support:

• Bank of Baroda (Baroda MPay)
• HDFC Bank (HDFC Bank MobileBanking)
• Axis Bank (Axis Pay)
• ICICI Bank (iMobile)
• Bank of Maharashtra (MahaUPI)
• State Bank of India (SBI Pay)
• South Indian Bank (SIB M-Pay)
• United Bank of India (United UPI)
• Vijaya Bank (Vijaya UPI)
• Federal Bank (Lotza)
• Union Bank of India (Union Bank UPI)
• UCO Bank (UCO-UPI)
• Karnataka Bank (KBL Smartz)
• Yes Bank (Yes Pay)
• Punjab National Bank (PNB UPI)

What is UPI 2.0?

The newest and upcoming UPI 2.0 payment system has enhanced capabilities and advantages. It is a more complete and secure service with an easier authentication process.

UPI Fees and Charges

The UPI platform does not have any fees or levies. The UPI programme was started to promote digital commerce. 

The NCPI formerly marked the transaction fees to be 50 paise each. The Government of India waived these fees to ensure that more people began using the platform.

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