Business Educational Employment Legal Nation Students

RBI extends timeline for new auto-debit rule by six months

New Delhi: The Reserve Bank of India (RBI) has decided to extend the timeline for banks to migrate to the framework for processing of e-mandates on recurring online transactions by six months to September 30, 2021 amid concerns that a new set of auto debit rules kicking-in on April 1 will lead to large scale disruption in payments.

The banking regulator, however, warned that non-compliance beyond the extended timeline would be a serious concern and be dealt with separately.

“The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default,” the RBI said in a statement on Wednesday.

Based on a request from Indian Banks’ Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, the RBI had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021.

Thus, adequate time was given to the stakeholders to comply with the framework. It is, however, noted that the framework has not been fully implemented even after the extended timeline. This non-compliance is noted with serious concern… Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action,” the regulator said in a release. The new rules, first issued in August 2019, will now be effective starting October 2021.

According to RBI, the primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience. The new framework mandates use of an additional factor of authentication during automatic recurring payments for various services including recharge, utility bills.

Tags