Bima-ASBA, a new way to pay insurance premiums via UPI, BFSI News, ET BFSI

The Insurance coverage Regulatory and Improvement Authority of India (IRDAI) has launched Bima-ASBA (Purposes Supported by Blocked Quantity), a brand new cost mechanism geared toward making insurance premium payments smoother and safer. Efficient from March 1, 2025, this facility permits policyholders to dam the required premium quantity of their financial institution accounts as an alternative of paying upfront. The quantity is debited provided that the coverage is issued, guaranteeing higher transparency and adaptability within the cost course of.

Right here’s an in depth explainer that will help you perceive how Bima-ASBA works and its advantages.

What’s Bima-ASBA?

Bima-ASBA (Purposes Supported by Blocked Quantity) is a brand new cost mechanism launched by the Insurance coverage Regulatory and Improvement Authority of India (IRDAI) that enables policyholders to dam funds of their financial institution accounts for insurance coverage premium funds. The quantity is debited solely when the coverage is issued.

When will Bima-ASBA come into impact?

The ability will likely be efficient from March 1, 2025, as per IRDAI’s round issued on February 18, 2025.

How does Bima-ASBA work?

1. Choosing Bima-ASBA: Whereas making use of for an insurance coverage coverage, you possibly can select the choice to dam the premium quantity in your checking account.
2. Request for blocking funds: The insurer requests the financial institution (by means of its associate financial institution) to dam the required quantity.
3. Consent and fund blocking: Your financial institution seeks your approval, and as soon as granted, the quantity is blocked however stays in your account.
4. Funds stay blocked till resolution: The blocked quantity can’t be used for different transactions till the insurer makes an underwriting resolution, inside a most of 14 days.
5. Fee on acceptance: If the insurer approves your utility, the blocked quantity is debited and transferred to the insurer.
6. Refund on rejection or cancellation: If the insurer rejects the applying or for those who cancel it, the blocked quantity is unblocked and returned to your account with out deductions.

What occurs if the insurer doesn’t course of the applying inside 14 days?If the insurer doesn’t course of the applying inside 14 days, the blocked quantity is robotically unblocked by the financial institution.

Can the blocked quantity earn curiosity?

Sure, because the cash stays in your account, it might nonetheless earn curiosity throughout the blocked interval.

Does Bima-ASBA apply to all varieties of insurance coverage?

The ability is designed for all times and well being insurance policies, guaranteeing a clean and safe cost course of.

What are the advantages of Bima-ASBA?

• No instant debit: Funds stay in your account till the coverage is accepted.
• Safe cost course of: Premium is debited solely upon coverage issuance.
• Automated refund: If rejected or cancelled, funds are unblocked with out deductions.
• Curiosity advantages: The blocked quantity might proceed to earn curiosity