On March 31, 2021, The Reserve Bank of India (RBI) extended the timeline for Banks to move to the new norms for Additional Factor Authentication (AFA)on e-mandate for recurring payments through online transactions by 6 months i.e. till September 30, 2021.
Background:
- The framework for e-mandate was first issued by RBI in August 2019 and fixed the timeline up to March 31, 2021 however, banks have not developed capabilities to support the new system and hence it is finally extended to September 30.
Objective: The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience.
e-Mandate:
- It is a digital payment service initiated by RBI and the National Payments Corporation of India (NPCI).
- It will allow the issuing bank and other institutions to automatically debit mentioned amount recurring payments (like insurance premiums, bill payments, loan instalment collections) from the users’ bank account without their intervention.
Framework by RBI on e-mandate Recurring Transactions:
i.For opting e-mandate facility the cardholder should undertake a one-time registration process, with Additional Factor of Authentication (AFA) validation by the issuer.
ii.For auto-debit from cards/wallets above the cut-off (Rs 5,000), an additional one-time password (OTP) should be provided.
Note – On January 1, 2021, RBI had enhanced the limit for contactless card transactions and e-mandates for recurring transactions through cards and UPI from Rs 2,000 to Rs 5,000.
iii.The bank has to send a notification to customers 5 days before the e-mandate payments and it also should send a pre-transaction notification to the cardholder, at least 24 hours prior to the debit from the card and allow it only after the customer has confirmed it.
iv.The users can choose any mode of options (SMS, email, etc.) for receiving the notifications and the cardholder will also have an option to opt-out of that particular transaction
v.The framework mandated the use of AFA during registration and first transaction.
vi.The users will have an online facility to withdraw from the e-mandate facility at any point and no charges will be levied for availing the same.
vii.The processing of e-mandate registered cards for recurring transactions without AFA will be discontinued after September 30 2021.
Recent Related News:
On February 18, 2021, Dr Arun Kumar Mehta, IAS, Financial Commissioner, Finance Department, Govt of Jammu and Kashmir(J&K) formally launched the e-Kuber payments system of Reserve Bank of India(RBI) in J&K. J&K is the 1st Union Territory to implement version 2.9 of the e-Kuber payments system.
About Reserve Bank of India(RBI):
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
Governor – Shaktikanta Das
