RBI’s new auto-debit rules kick in from today. 5 things you should know

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

Ravi Prakash Kumar
Updated1 Oct 2021, 07:18 AM IST
Under the new norms, banks will be required to inform customers in advance about recurring payments
Under the new norms, banks will be required to inform customers in advance about recurring payments(REUTERS)

To bolster the safety and security of card transactions, the Reserve Bank of India (RBI) mandated new auto-debit rules kick in from Friday. RBI's directive states that there will be no automatic recurring payment for various services including utility bills, recharge of phone, DTH, and OTT, among others as the additional factor of authentication (AFA) will become mandatory from today. 

Inform in advance about auto-debit

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

One-time registration process

Customers will have to go through a one-time registration process, and subsequent transactions can be performed without the additional factor authentication.

While registering, customers can now provide the validity period for future transactions.

OTP for payments above 5,000

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

Choose to opt-out

Customers can now even choose to opt out of a particular transaction or mandate via the link provided in the pre-debit notification.

No impact on these auto-debits

Any standing instructions registered using bank accounts for mutual funds, SIPs, equated monthly installments for loans will not be impacted by these new rules.

RBI's motive

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.

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First Published:1 Oct 2021, 07:18 AM IST
HomeIndustryBankingRBI’s new auto-debit rules kick in from today. 5 things you should know

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