Money & Banking

Auto debit norms: Payments Council of India seeks extension for smooth transition

Surabhi Mumbai | Updated on September 30, 2021

The new norms for processing of recurring online transactions will come into effect from October 1

The Payments Council of India has requested the Reserve Bank of India to extend the norms for auto debit mandates for recurring transactions by one to two months.

“It is a very positive and consumer centric move. We have written to the RBI for a short extension of one or two months to ensure a smooth transition to the new norms. All ecosystem players have been working hard but it will take some more time,” said Vishwas Patel, Chairman, Payments Council of India and Executive Director, Infibeam Avenues Limited.

At present, the new norms for processing of recurring online transactions will come into effect from October 1.

The RBI had in March this year already extended the deadline for banks to comply with norms by six months to September 30.

Patel said that while major private banks have gone live with the facility, a number of other players are still in the final stages of preparedness. State Bank of India’s debit card will be able to go live in middle of October, he said.

SBI’s credit card systems are ready to meet the norms. Lenders including HDFC Bank, ICICI Bank, Bank of Baroda, Citibank, IDFC Bank and Axis Bank are also ready and others such as IndusInd Bank, RBL Bank and Yes Bank are also geared up to meet the deadline.

However, most public sector banks are still working to meet the deadline.

According to experts, just about 60 per cent of the ecosystem is seen to be ready. “In the long run, the RBI norms are good for the ecosystem and will benefit the consumer. But in the short term, the deadline of September 30 can cause a lot of confusion for the existing mandates that are present. For all cases, where customers have put in the cards which have not migrated to the new system or banks that have not complied, these mandates will not be processed,” said Shashank Kumar, CTO and co-founder, Razorpay, adding that recurring transactions on debit cards will also be allowed.

Also read: New auto-debit rules: Banks, merchants working on a common platform

Razorpay is one of two companies that has an API product to help banks comply with these regulations.

Auto debit mandates

In order to enhance customer safety, the RBI has introduced new auto debit mandates that require an additional factor authentication for cards, wallets, prepaid instruments and UPI during registration and first transaction, as well as pre-transaction notification by banks and facility to withdraw the mandate. For recurring transactions of over ₹5,000 a month, customers will require an additional factor authentication.

Published on September 29, 2021

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