New auto debit rules of RBI to set in from Friday


With the Reserve Bank of India’s (RBI) extended deadline coming to an end, there will be no automatic recurring payment for various services including recharge and utility bill as the additional factor of authentication (AFA) will become mandatory from Friday.

On December 4, RBI had directed all banks including RRBs, NBFCs, and payment gateways that the processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.

As part of risk mitigation measures, RBI announced this step to bolster safety and security of card transactions.

However, non-readiness of some of the players forced the RBI to extend the deadline on recurring payment such as utility bills, recharge of phone, DTH and OTT, among others, till September 30.

Under the new norms, banks will be required to inform customers in advance about recurring payment due and transaction would be carried following nod from the customer. So the transaction would not be automatic but would be done after authentication from the customer.

For recurring payments above Rs 5,000, banks are required to send a one-time password to customers as per the new guidelines.

Most of the banks including State Bank of India (SBI) have informed their customers about the new rules.

HDFC Bank in a bulk message to customers said as per RBI guidelines on e-Mandate on cards, the bank will decline non-compliant recurring transaction at merchant web or app on your Credit/Debit Card from October 1, 2021.

“Alternate Solution – Retry regular payment on Merchant Web/App authenticated via OTP or Pay via AutoPay in BillPay on our NetBanking for your Electricity /Water/Gas/ Landline/Postpaid mobile/Broadband/Insurance billers,” it said.

In August 2019, the Reserve Bank of India (RBI) had issued a framework for processing of e-mandates on recurring online transactions.

Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.
RBI had said the requirement of AFA has made digital payments in India safe and secure and the primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.

In the interest of customer convenience and safety in use of recurring online payments, the framework mandated use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of Rs 2,000, since enhanced to Rs 5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc.