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IRDAI Introduces Bima-ASBA to Simplify Insurance Premium Payments Through UPI.

Banking & Finance | Dated: 21 Feb 2025

In February 2025, the Insurance Regulatory and Development Authority of India (IRDAI) introduced a One-Time Mandate (OTM) on Unified Payments Interface (UPI) for insurance companies through a new payment mechanism called Bima-Applications Supported by Blocked Amount (Bima-ASBA).

🎯 Key Highlights:

  • - This initiative aims to simplify the payment process for life and health insurance policies, enabling policyholders to block funds in their bank accounts for premium payments, ensuring smooth transactions without immediate debits.
  • - The new payment mechanism will come into effect on March 1, 2025.
  • - Bima-ASBA allows insurers to offer a One-Time Mandate (OTM) via UPI to block a specific amount in the bank account of the prospect, transferring money only after the insurance coverage is granted.

💡 Other Important Facts:

  • (i) The insurance premium amount will be deducted when the insurer accepts the proposal. If the insurer rejects the proposal, the funds will be unblocked and released.
  • (ii) The blocked funds remain in the policyholder's account until an underwriting decision is made. The premium is deducted after the insurance is issued. If rejected, the funds will be unlocked within one business day. The block remains valid for up to 14 days or until the underwriting decision is made.
  • (iii) Insurers must send a proposal form with a standard declaration to policyholders to block the amount using UPI, and the UPI-OTM service allows consumers to authorize a block on money instead of a direct debit, ensuring faster transaction processing.

📚 Test Your Knowledge:

Which organization recently introduced Bima-ASBA to simplify insurance premium payments through UPI?

Correct Answer: IRDAI

🚀 Quick Recap:

About the Insurance Regulatory and Development Authority of India (IRDAI)

  • Chairman : Debasish Panda
  • Headquarters : Hyderabad