If you are paying your electricity bill, mobile bill or other usage bill through auto debit form, this is important news for you. The Reserve Bank of India (RBI) has issued new guidelines. Accordingly, from October 1, there will be a major change in the auto debit payment system across the country. What exactly is this change? Let's learn about it...
The RBI has directed the implementation of Additional Factor Authentication (AFA) to make digital payments more secure in the country. According to the Reserve Bank of India’s (RBI’s) new guidelines, customers are required to carry additional factor authentication (AFA) on all recurring payments done through their debit cards, credit cards, UPI and prepaid payments instruments (PPIs). This rule will kick in from 1 October.
However, after the appeal of IBA, the deadline for implementation was changed from 31st March 2021 to 30th September 2021. So that the bank can build a framework according to this framework.
Earlier, the RBI had said in December 2020 that the framework should be implemented by March 31, 2021. It is a matter of concern that banks have not developed this framework despite repeated opportunities. The RBI had once again extended the deadline till September 30, 2021 so that customers would not face any difficulties due to delays in banks' preparations. However, the RBI has taken stern action against the banks which did not prepare the framework within the stipulated time.
As per RBI rules, banks will send notifications to customers 5 days before the payment dates. Payment approval will only be granted if the customer allows it. If the recurring payment is more than Rs 5,000, the bank will send a one time password (OTP) to the customer. The RBI has taken this decision for the safety of the consumers. Earlier, the Reserve Bank had told all banks, payment gateways and other service providers that they could not store card details permanently. So recurring payments are going to be even more difficult. The RBI has taken this step after data leaks from Juspay and neo banking startup Chqbook.