New Auto-payment rules effective from April 1

March 31, 2021 Finance Talk Valli Sarvani No comments

The new financial year starts from tomorrow. Several new rules related to financial transactions will also change from tomorrow. The Reserve Bank of India (RBI) issued new guidelines to improve the security of financial transactions related to auto-debit.

Here are the new RBI rules effective from April 1:

RBI earlier stated that an additional factor authentication (AFA) is essential for an auto-payment facility for mobile, utility and other bills. So if your next monthly auto-payment towards subscription for various streaming platforms like Amazon Prime, Netflix etc., fails, don’t surprise and panic. It is due to the new rule of the RBI effective from April 1.
In the wake of increasing financial frauds, RBI made an AFA validation mandate for recurring transactions performed through all types of cards or wallets.
For this, banks and card issuers shall initiate e-mandate for recurring transactions. Cardholders shall undertake AFA validation for these transactions. They shall register for the e-mandate facility or seek modification or revocation of such facility. If the cardholder accepts AFA validation, then banks will continue the subsequent transactions without any AFA.
However, banks need to send pre and post-transaction notifications to the customers while performing recurring transactions to reduce the risk.
They shall have to send a pre-transaction notification at least 24 hours before the actual charge to the card through SMS or email.
Besides, banks shall not levy any charge for availing the e-mandate facility for recurring transactions.
Cardholders can withdraw from the e-mandate facility at any point since their consent is a must for recurring transactions.
The permissible limit for auto-debit from cards and wallets is ₹5,000. An additional one-time password (OTP) is essential for making transactions above the limit.
This rule is applicable for all recurring transactions performed through debit and credit cards, UPI and PPIs, wallets.
RBI asked all banks to introduce AFA by the end of the current financial year, that is today. Those transactions that do not comply with the given instructions shall not be continued from tomorrow.