New Delhi: In a reprieve for banks and millions of customers, auto debit facilities for payment of bills and subscriptions will stay in place for six more months. The Reserve Bank of India (RBI) has extended the deadline for a rule that would have caused disruptions from Apr. 1 (today).
Recurring transactions will continue till Sept. 30, after which the new RBI rule requiring additional authentication comes into force. The Central Bank said it had granted the extension to prevent any inconvenience to customers and to allow banks to migrate to the new system.
Under the rule, all recurring transactions using cards and prepaid payment instruments for automatic payment of mobile and utility bills and digital streaming subscriptions will require an additional go-ahead from the customer.
The customer will receive an alert before an automatic payment is scheduled and the transaction will be completed only once approved. Transactions above Rs. 5,000 will require an additional one time password (OTP).
The RBI said it was a move to improve the safety and security of digital payments. “The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience,” it said in a statement, adding that stakeholders had been given enough time to comply.
“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, warning of “stringent action” if there was more delay.
The RBI in August 2019 notified all scheduled commercial banks, card payment networks, prepaid instrument issuers, and the National Payments Corporation of India (NPCI) about the big change for recurring transactions. The rule will apply not just on banks and financial institutions offering credit cards, debit cards and other prepaid payment instruments, but also on mobile payment wallets and platforms enabling UPI-based payments.
This post was published on April 1, 2021 6:31 pm