Deadline to apply new rules of auto debit extended

New Delhi: The Reserve Bank of India (RBI) has given great relief to banks and payment gateway companies. It has increased the deadline for banks to follow the new rules of auto debit. It has been increased to 30 September 2021. This deadline was ending on 31 March 2021. This means that there will be no impact on automatic recurring payments for which e-mandate (e-approval) is required. That is, regular recharge and payment of electricity-water bills will be done through this system as before. Earlier, after 31 March, the Reserve Bank of India (RBI) mandated additional measures for additional factor authentication (AFA) or verification. Banks and payment gateways (platforms providing payment facilities) had sought additional time to comply with the RBI directive regarding automatic recurring payments.

On December 4, the RBI directed all banks, including Regional Rural Banks (RRBs), NBFCs (non-banking financial companies) and payment gateways. Accordingly, if the system does not comply with the AFA in the automatic recurring payment (domestic or foreign) arrangement using the card or prepaid payment instrument (PPI) or Unified Payments Interface (UPI), the arrangement will be issued from March 31, 2021. Will not last.

The move was announced by the central bank as part of risk mitigation measures. Its purpose is to make the transaction strong and secure through the card.

It was feared that if this additional verification measure was not complied with, the related units could get impacted after March 31 in payment of other bills, including customer-centric services, OTT (over the top), including electricity.

Recently, the RBI raised the limit for payment through contactless card and automatic bills through UPI with the card from Rs 2,000 to Rs 5,000 from January 1. The objective of this initiative is to make digital transactions easy and secure.

What will change?

Under this new rule, banks will have to inform customers about the payment of bills on a regular basis. Payment can be made only after approval from the customer. Therefore, the payment of bills will not be automatic, but will be possible only after verification from the customer.

Rules applicable for the payment of how much amount?

For payment of more than Rs 5,000 under the new guideline, banks will have to send ‘one-time password’ to the customers under the new guideline.

A senior official of the e-commerce company had said that the industry is not yet ready to implement the RBI directive. He had said that if the RBI did not give time for compliance with the rules, then from April 1, banks will not be able to comply with the e-approval given by the customer regarding the transaction. This will regularly interrupt the payment of bills and other transactions. This will break the trust of customers about digital payments.