The Insurance Regulatory and Development Authority of India (IRDAI) notifies Bima-ASBA (Applications Supported by Blocked Amount) guidelines starting from 1st March, 2025. This necessitates the respective bank to block the premium amount in your account on behalf of the insurer (insurance companies). The amount can be debited from your account only after completing the underwriting.

This guideline calls for the adoption of UPI One-Time Mandate, transforming how insurers collect payments from people. It is quite similar to the ASBA in IPOs, where funds stay in your account until shares are allotted. It will enable greater transparency and control in your hands.

How Will It Keep Your Money Safe?

According to the earlier guidelines, while buying a policy, you were supposed to pay the premium upfront, before the policy is approved. On the other hand, the newly notified guideline enables you to choose UPI One-Time Mandate for premium payments. Enabling this will block the premium amount in your account. It will earn you interest while also prohibiting you from withdrawing the principal amount.

As soon as the policy is approved, the insurer instructs the bank to debit the blocked amount. The premium is then transferred to the insurer’s account, and the policy is issued. In case of policy rejection, the insurer notifies the bank to release the blocked amount. Also, if you decide to cancel the application before underwriting is completed, you can submit a cancellation request to the insurer. This cancellation request is further communicated to the bank, enabling them to release the blocked amount within 1 working day.

What Are The Other Benefits for You?

Other than payment blocking and hassles of follow-up, you will gain more benefits, like paying no upfront fee as long as the policy is not approved, continuing to earn interest on the blocked amount, and finally, feeling safe and transparent about the entire process.

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Not Mandatory for You

Bima-ASBA is an optional feature aimed at enhancing convenience for policyholders, but its use is not mandatory. The IRDAI requires insurers to offer Bima-ASBA as an option for life and health insurance policies; however, policyholders can still opt for traditional payment methods if they prefer.

Read other recent on Fintech at: Here’s Why the Innovation Lead From Cambridge Calls India’s UPI System Revolutionary

This policy has the potential to transform India's insurance sector by fostering stronger trust and transparency between insurers and policyholders. By ensuring secure and seamless transactions, it enhances customer confidence, ultimately strengthening the insurance sector.