CATEGORY - UPI

IRDAI’s Bima-ASBA: A New UPI-Based Insurance Payment System | Easebuzz

UPI - 15 May, 2025

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India’s insurance sector is stepping into a new era of secure, transparent premium collection with Bima-ASBA (Applications Supported by Blocked Amount). Rolled out by the Insurance Regulatory and Development Authority of India (IRDAI) and effective from 1st March 2025, this digital-first approach ensures premium amounts are blocked, not debited, until a policy is approved.

This blog unpacks how Bima-ASBA works, what it means for policyholders and insurers, and how it aligns with India’s growing shift towards digital payment solutions like UPI One-Time Mandates.

What is Bima-ASBA?

Bima-ASBA is a UPI-based premium payment method that enables insurers to block funds in the policyholder’s bank account instead of instantly debiting it. The actual deduction takes place only after the policy is approved, ensuring fair and transparent transactions.

Key Highlights

Premium amount is blocked using a UPI One-Time Mandate at the time of application.
Funds are debited only after successful underwriting and policy approval.
If a policy is declined or canceled, the blocked amount is automatically released without manual follow-ups.

This model is inspired by the ASBA process in IPOs, where investor funds remain blocked until share allotment. Similarly, in Bima-ASBA, policyholders retain control of their money during the underwriting phase.

How Does UPI One-Time Mandate Work?

A UPI One-Time Mandate authorizes insurers to block a specific amount in a customer’s bank account. The mandate:

Does not deduct funds immediately.
Keeps the amount earning interest in the user’s bank account.
Releases funds instantly if the policy is not approved or canceled.

This integration enhances payment reliability, reduces refund complexities, and improves user experience for digital-first insurance buyers.

Benefits of Bima-ASBA for Policyholders

Bima-ASBA brings transparency, control, and convenience to policyholders. Here’s how:

Full Payment Transparency: Funds remain in your account until the policy is issued. No hidden deductions or insurer float income.
Interest Earnings Continue: Since the money isn’t debited immediately, you continue earning interest during the underwriting period.
Better Financial Planning: With no instant debits, managing monthly budgets becomes easier and more predictable.
Seamless Cancellation Handling: Whether you cancel or your application is rejected, the amount is unblocked without any additional steps.
No More Refund Delays: If your policy application is declined, the blocked premium is released automatically—no refund process needed.

Why IRDAI Introduced Bima-ASBA

The IRDAI launched Bima-ASBA to:

Enhance transparency and trust in premium collection.
Ensure premiums are deducted only post-approval.
Align with the Policyholder Protection Master Circular.
Prevent overcharging or undercollection of premiums.
Promote secure and paperless digital payments in insurance.

One key principle of Bima-ASBA: explicit customer consent is mandatory before funds are debited, strengthening control and compliance.

Is Bima-ASBA Mandatory for Customers?

No. While insurers must offer Bima-ASBA as a payment option from March 1, 2025, customers are free to choose. You can still opt for traditional premium payment methods if preferred.

Every proposal form must clearly mention Bima-ASBA as an option, but no insurer can reject your application for choosing not to use it. This ensures flexibility and user choice remain intact.

Why Insurers Must Align with Bima-ASBA Compliance

Insurance providers stand to gain significantly from adopting Bima-ASBA compliance:

Builds Customer Trust: Customers retain control of their money, increasing transparency and credibility.
Ensures Regulatory Compliance: IRDAI mandates its usage—compliance keeps insurers aligned with evolving standards.
Streamlines Premium Collection: UPI-based automation reduces manual errors, refund requests, and operational delays.
Reduces Risk of Miscollection: Since premiums are debited post-approval, it eliminates incorrect payments and minimizes cancellations.

How Easebuzz Helps Businesses Implement Bima-ASBA

Easebuzz empowers insurers to seamlessly adopt the Bima-ASBA framework through a robust and secure UPI 2.0-powered payments infrastructure. With plug-and-play API integrations and real-time tracking, insurers can offer customers a smooth, transparent, and compliant premium payment experience.

Here’s how Easebuzz makes Bima-ASBA implementation effortless:

UPI Block Mandates for Secure Premium Authorization: Enable policyholders to block premium amounts in their bank accounts without immediate debit—ensuring secure, IRDAI-compliant collections post-underwriting.
e-Mandate Support for Recurring Insurance Payments: Facilitate recurring collections with Easebuzz’s e-mandate capabilities, ideal for long-term insurance plans needing automated premium schedules.
Real-Time Status Updates for Easy Reconciliation: Track mandate approvals, policy status, and transaction flows in real time—helping insurers reconcile payments instantly and reduce operational overhead.
Seamless API Integration for Quick Go-Live: Easebuzz offers ready-to-integrate APIs that plug into your existing systems effortlessly, accelerating your go-live timeline for Bima-ASBA compliance.

Conclusion

Bima-ASBA is not just a regulatory update—it’s a step forward in building trust-first digital insurance infrastructure. For policyholders, it’s about peace of mind and payment flexibility. For insurers, it’s about compliance, efficiency, and customer satisfaction.

As India moves towards a digitally empowered insurance ecosystem, solutions like Bima-ASBA, powered by UPI mandates, will lead the charge. Ready to integrate? Easebuzz can help you stay ahead of the curve.

FAQ's

What is the deadline for insurance companies to implement Bima-ASBA systems?

Insurance companies must ensure their systems are Bima-ASBA compliant by March 1, 2025. From this date, customers should be able to choose One-Time Mandates (OTM) at checkout while buying new policies.

Is Bima-ASBA mandatory for all policyholders?

No, Bima-ASBA is currently applicable only for new policies that meet specific regulatory conditions. Policyholders are not obligated to select the OTM option during checkout.

Will Bima-ASBA be available for all types of insurance policies?

As per IRDAI guidelines, Bima-ASBA is applicable to Life and Health Insurance policies only, for now.

Can a customer or merchant cancel an accepted mandate?

Once a mandate is accepted, only the merchant has the authority to cancel it. The customer cannot cancel it on their own.

How is the 14-day expiry period for a mandate calculated?

The 14-day expiry period is defined by the merchant at the time of creating the mandate and is based on the date and time set in the mandate’s expiry parameter.

Is UPI One-Time Mandates supported on RuPay Credit Cards?

Yes, UPI-based One-Time Mandates are supported on RuPay Credit Cards, enabling recurring payments via credit card.

If token delete API is used, will the hold on funds be released?

No, deleting the token does not release the blocked funds. Until an One-Time Mandates revocation feature is launched, the mandate remains active unless the merchant cancels it.