RBI’s new auto-debit rules start today: 5 key things to know

The new rules force banks to inform the customers in advance about the auto debit.

The Reserve Bank of India (RBI) imposed new auto-debit guidelines, which go into effect on Friday, to improve the safety and security of card transactions. According to the RBI's regulation, there will be no automated recurring payments for a variety of services, including energy bills, phone recharges, DTH, and OTT, among others, since the additional factor of authentication (AFA) will be required from today.

Auto-debit

Banks will be forced to notify clients in advance of regular payments due under the new rules, and transactions will be carried out when the customer gives his or her approval. As a result, the transactions would not be automatic, but rather would be carried out following the customer's verification.

One-time registration process

Customers will have to complete a one-time registration process, after which they will be able to conduct transactions without the need for additional factor authentication.

Customers can now specify the validity period for future transactions when registering.

OTP for payments above Rs 5,000

According to the new requirements, banks must provide clients a one-time password for recurring payments over Rs 5,000.

Choose to opt-out

Customers can now use the link provided in the pre-debit message to opt out of a specific transaction or obligation.

No impact on auto-debits

These new restrictions will not affect any standing instructions for mutual funds, SIPs, or equated monthly instalments for loans that are recorded using bank accounts.

RBI's motive

The necessity of the AFA, according to the RBI, has made digital payments in India safe and secure, with the framework's primary goal being to safeguard customers from fraudulent transactions while also improving user convenience.