RBI’s auto-debit rules: With the Reserve Bank of India’s (RBI) extended deadline coming to an end, there will be no automatic recurring payment for various services including recharge and utility bill as the additional factor of authentication (AFA) will become mandatory from Friday.
Payment of home loan, vehicle loan EMI, insurance premiums, school fees, subscription plans are among the most common standing instructions set by customers for auto-payment.
Since there will be no recurring auto payments from credit, debit cards and UPI from October 1, standing instructions for auto-debit will require additional authentication.
“Customers are instructed to watch for email, SMS communication from the bank. OTP will be sent for additional authentication for payments over Rs 5,000 if the preset standing instruction is non-compliant with new RBI rules,” said a bank manager at State Bank of India.
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.
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.
