RBI Revises Rules For Auto Debit of EMIs from Accounts

24 Sep, 2021 13:33 IST|Sakshi Post

From October 1, your auto-debit for EMI payments and other expenses may be affected.

Private lenders HDFC Bank, ICICI Bank, and Axis Bank are racing against the clock to satisfy the central bank's recurring payment order by the deadline, avoiding any inconvenience to their clients.

Hyderabad: There's a chance you'll have to do it manually if you've set up e-mandate instructions for auto-debit of payments like EMIs for house loans or other regular payments from your bank accounts. This is owing to the Reserve Bank of India's (RBI) new compliance order, which requires banks and other payment channels to enhance security procedures for card payments by October 1.

Banks may only conduct such transactions if they provide a pre-debit notice to clients at least 24 hours before the payment, according to the RBI's new guidelines. Additionally, automatic payments above Rs 5,000 will require manual authentication by the customer through a one-time password (OTP).

Private lenders HDFC Bank, ICICI Bank, and Axis Bank are racing against the clock to satisfy the central bank's recurring payments requirement by the deadline, avoiding any inconvenience to their clients.

For instance, HDFC Bank notified its customers that "effective October 1, 2021, it will not approve any standing instruction (e-Mandate for processing of recurring payments) given at a merchant's website, app, or on HDFC Bank credit or debit card, unless it is as per RBI complaint process".

It further stated that such automated payments will only be processed for those parties that have completed the creation, integration, and acceptance of a single RBI-compliant industry-wide platform by the deadline.

"The new conditions prescribed by RBI require a cohesive effort by all stakeholders, including Card Issuing banks, Merchant Acquiring Banks, Card Networks and Merchants. All constituents must complete the development, integration and deployment of a common platform fully compliant with the RBI guidelines. A common industry-wide platform is being developed, and HDFC Bank has completed its internal development and integration. We are now working jointly with merchants to make this platform live for customers at the earliest".

To comply with the RBI's requirement, banks are reportedly collaborating with payment aggregators like Razorpay and BillDesk to interface with the single e-mandate platform.

According to the Economic Times, Axis Bank and ICICI Bank's systems would be compliant with the RBI order far ahead of or by the October 1 deadline.

After numerous banks reported their unwillingness to follow the RBI's directives, the central bank postponed its initial March 2021 deadline. It issued a circular warning that if banks executing such orders do not comply with the new regulation by September 2021, they would face severe consequences.

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