RBI
Auto debits from bank accounts to face disruption from April 1
New Delhi/IBNS: Recurring transactions such as mobile, utility, and other bills as well as subscription charges for over-the-top (OTT) platforms through credit cards, debit cards, UPI, or other prepaid payment instruments (PPIs) will be interrupted from April 1 in view of the new Reserve Bank of India (RBI) guidelines that require additional authentication to approve direct debits from customers' accounts.
Initially, the rule was planned for recurring transactions up to Rs 2,000 but in December 2020 its limit was increased to Rs 5,000 on the request of the stakeholders.
In August 2019, the RBI had informed all scheduled commercial banks, card payment networks and National Payments Corporation of India (NPCI) about this change that would affect millions of users.
Mobile payment wallets and platforms enabling UPI-based payments will also be required to comply with this rule.
"Processing of recurring transactions (domestic or cross-border) using cards / PPIs / UPI under arrangements / practices not compliant with the aforesaid instructions shall not be continued beyond March 31, 2021," the RBI circular issued on December 4 read.
Banks and payment platforms have to notify the customers 24 hours prior to the debit, seeking the customer's consent, only after which the issuer will be able to proceed with the payment.
The next recurring transactions may take place without that extra step.
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