RBI imposed a new rule for the auto-debiting feature
Bank of India (RBI) imposed a new rule for the auto-debiting feature of banking
transactions, which has been set to take effect on October 1, Friday, to ensure
transaction security. According to the new RBI regulation, there would be no
more automatic recurring payments for the numerous services associated with it,
including as utility bills, phone recharges, DTH, and OTT payments. This is
because, as of today, the apex bank's directive specifies that any transaction
requiring an extra factor of authentication (AFA) must be approved first. This
essentially indicates that no money can or will be debited from the bank
account on the basis of an automated debit payment without the customer's
agreement. The adoption of AFA, according to the RBI, is intended to offer
additional layers of protection to any transactional activity. In this
scenario, the central bank's principal goal is to protect bank customers from
fraudulent transactions while also improving their ease.
the deadline has been moved forward multiple times. The reason for this is
because many big banks, including HDFC Bank, ICICI Banks, and the State Bank of
India (SBI), failed to follow the given directive, forcing the RBI to extend
the deadline by six months.
framework has not been properly implemented even despite the extended
timeline,” the RBI stated in a circular. Noncompliance is handled seriously,
and it will be dealt with separately. Because some stakeholders have been slow
to adopt, there is a risk of widespread customer inconvenience and default. To
minimize client inconvenience, the Reserve Bank has decided to extend the
deadline for stakeholders to migrate to the framework by six months, until
September 30, 2021.”
Besides that, here are five things you should know about this
new rule as we move into October.
1) Advance Alerts
to the new RBI regulation, your particular bank with which you have
transactional accounts will have to send you information or an alert 24 hours
in advance regarding recurring payment dues. It is sent ahead of time to give
the customer time to accept and verify the payment, as the bank will not
complete the transaction without the account holder's consent. This extra layer
of protection ensures that the customer is aware of every transaction that
involves money moving out of their accounts.
2) One-time Registration
may appear to be a time-consuming procedure, it is not. Customers will only
have to go through the registration process once under the new regulation, and
only the first transaction will require the additional element of
authentication. Customers can execute further transactions without the AFA
after the first transaction. Customers can, in fact, specify the validity
period for future transactions upon registering.
3) Payments exceeding more than Rs 5,000 by OTP
recurring payment exceeds Rs 5,000, the bank in issue is required by RBI
mandate to email the consumer a one-time password (OTP) before the transaction
may be executed.
4) Its a Personal Choice
of any bank can opt out of the mandate or any individual transaction at any
moment for the sake of convenience. This can be done by using the pre-debit
notification, which includes a link to a portal where you can complete the
process step-by-step. Keep in mind that this mandate was put in place to
protect your bank account and the cash within it.
5) Auto-Debits are not impacted.
restrictions and adjustments will not affect any standing instructions that
were registered for using existing bank accounts for mutual funds, SIPs, or
equivalent monthly installments for loans.