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Debit card, credit card auto-payment: RBI extends deadline for processing recurring transactions

Under the new norms, banks will have to inform customers about recurring payments at least 24 hours prior to the actual debit to the card. Photo: iStockPremium
Under the new norms, banks will have to inform customers about recurring payments at least 24 hours prior to the actual debit to the card. Photo: iStock

  • Now banks and financial institutions have time till 30 September to implement the new framework
  • People usually use the auto-payment or recurring transactions for paying mobile, utility and other bills

In a relief to banks and wallets, Reserve Bank of India (RBI) on Wednesday extended the timeline for processing recurring online transactions by six months. Now banks and financial institutions have time till 30 September to implement the new framework. "To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till 30 September, 2021," RBI said.

To make digital payments in India "safe and secure", the banking regulator introduced Additional Factor of Authentication (AFA). The recurring transactions using debit cards, credit cards, Unified Payments Interface (UPI) or other prepaid payment instruments (PPIs) will require an additional factor authentication (AFA) from 1 April, 2021, the central bank earlier mentioned.

People usually use the auto-payment or recurring transactions for paying mobile, utility and other bills. The monthly subscription charges for different streaming platforms including Netflix, Amazon Prime, Disney+ Hotstar are generallauto-debited from debit or credit cards.

Under the new norms, banks will have to inform customers about recurring payments at least 24 hours prior to the actual debit to the card. The notification can be sent to the users via SMS or email. To carry the transaction for the first time, a nod from customer is mandatory. However, this extra step can be avoided for the subsequent transactions, the regulator mentioned. The limit for auto-debit from cards and wallets, is set at 5,000.

For transactions above the cut-off, an additional one-time password (OTP) will be needed. The user will have an option to "opt-out of that particular transaction" at any point. Banks and wallets can not levy any extra charges on customers for opting or withdrawing recurring payments. The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience, RBI mentioned.

"Based on a request from Indian Banks’ Association (IBA) for an extension of time till 31 March, 2021, to enable the banks to complete the migration, Reserve Bank had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021. Thus, adequate time was given to the stakeholders to comply with the framework," the regulator said.

"It is, however, noted that the framework has not been fully implemented even after the extended timeline. This non-compliance is noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default," RBI said.

"Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action," the regulator said.


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