The Insurance Regulatory and Development Authority of India (IRDAI) has permitted the use of a One-Time Mandate (OTM) on Unified Payments Interface (UPI) for insurance premium payments. This initiative, named Bima Applications Supported by Blocked Amount (Bima-ASBA), will allow policyholders to block funds in their bank accounts for specific transactions, ensuring a seamless and secure payment process.
“Under the facility called the Bima Applications Supported by Blocked Amount (Bima-ASBA), the transfer of money from the prospect to the insurer happens only when an insurance policy is issued. In this facility, insurers can offer a one-time mandate for blocking a certain amount through UPI in the bank account for the concerned prospect,” IRDAI said.
“The amount towards the insurance premium will be debited only after the insurer decides to accept the proposal. In case the insurer does not accept the proposal, the amount shall be unblocked and shall be available at the disposal of the prospect,” it added.
To facilitate this feature, insurers must send a proposal form to policyholders with a standard declaration for blocking the amount via UPI. The facility will be available for both life and health insurance policies. Additionally, both the Life and General Insurance Councils are required to issue a standard declaration within a week of IRDAI’s circular, ensuring uniform implementation of this authorization process.
Importantly, policyholder proposals will not be rejected for choosing not to opt for Bima-ASBA.
As per the IRDAI guidelines, insurers must collaborate with multiple banks and establish necessary contractual agreements to support the OTM through UPI. The process includes authentication of the policyholder’s one-time mandate as per applicable laws. The blocked amount will either be automatically released within 14 days from the initial blocking date or within one working day if the insurer rejects the proposal.
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The Bima-ASBA facility is set to go live on or before March 1, 2025. This move is expected to streamline premium payments, reduce payment failures, and enhance policyholder convenience, further strengthening India’s digital insurance ecosystem.
