Got Bank's Message Over Auto-Debit Feature? Your Auto-Payments Remain Unaffected As RBI Grants 3-Month Extension

The central bank has granted the extension to prevent inconvenience to customers and give more time to banks to migrate to the new system. Know all about it.

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New Delhi: In a relief for banks and customers, auto-debit facilities for payment of bills and subscriptions will remain unaffected for six months ahead as the Reserve Bank of India (RBI) has extended the deadline for the rule that was to stop the feature tomorrow.

The central bank has granted the extension to prevent inconvenience to customers and give more time to banks to migrate to the new system which will add additional authentication.

RBI took cognizance of Banks’ failure to move to the new framework by March 31 despite an extension as its circular stated: “It is 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”.

“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 September 30, 2021. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action,” it added.

The new RBI rule introduces additional authentication. All recurring transactions using cards and prepaid payment instruments such as automatic payment of mobile and utility bills, streaming subscriptions, etc will require an additional go-ahead from the customer.

The customer will receive an alert before an auto-payment is scheduled and the transaction will be completed only after approval. Transactions above ₹ 5,000 will require an additional one time password (OTP).

To ensure safety in use of recurring online payments, “the framework mandates use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of ₹2,000, since enhanced to ₹5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc”.

"The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience," the RBI wrote.