RBI’s new auto Debit Rules- Highlights
The Reserve Bank of India (RBI) has mandated new auto-debit rules on October 1, 2021 in order to strengthen the safety and security of card transactions.
As per RBI’s directive, there will be no automatic recurring payment for several services like utility bills, DTH, recharge of phone and OTT because additional factor of authentication (AFA) will become mandatory onwards.
Advance information about auto-debit
Under new directives, banks will have to inform the customers in advance regarding the recurring payments due. Transactions will not be automatic but will be done after customer has authenticated it.
Customers are required to follow a one-time registration process. After this process, further transactions can be performed without any additional factor authentication. Customers can provide the validity period for future transactions, while registering for the process.
Under the new norms, banks are required to send a one-time password to the customers for recurring payments of more than Rs 5000.
Customers will get an option to opt out from a particular transaction or mandate through a link provided in pre-debit notification.
Will it impact loan instalments?
New norms will not impact any standing instructions that have been registered using bank accounts for mutual funds, SIPs, equated monthly instalments for loans.
Objective of new norms
RBI had made AFA mandatory with the objective of making digital payments in India safe and secure. It also seeks to protect customers from fraudulent transactions.
Category: Economy & Banking Current Affairs
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