Automated Recurring Payments & Equated Monthly Installments (EMI)

Many of us would be having Recurring Payments set with many of the banks for Home Loans, Car Loans, Business Loans, Personal Loans and so on. All those amounts are calculated in advance and being debited from our bank accounts on monthly basis. These are called as Equated Monthly Installments (EMI)

From 1st October 2021, Reserve Bank of India (RBI) has imposed a new rule on this automated recurring card payments. The new rule is, if your monthly subscription amount of any service exceeds Rs.5,000, then an additional factor of authentication (AFA) will become mandatory

On 4th December 2020, RBI has directed all banks including Regional Rural Banks (RRBs), Non-Banking Financial Companies (NBFCs) and payment gateway that the processing of recurring transactions (either domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payment Interface (UPI) under arrangements / practices not compliant with AFA would not be continued beyond 31st March 2021

However, many banks and financial institutions are not ready with the process and forced the RBI to extend the deadline on recurring payments till 30th September 2021 such as 

• Utility Bills Payments
• Recharge of Phones
• DTT Payments
• OTT Payments
• Loans Recurring Payments

Now, Banks and other payment gateway institutions need to take the customers authority using a OTP (One-Time Password) for recurring payments above Rs.5,000. This should be a welcome move by all citizens of the country. No one can take money from our bank account without our knowledge. Moreover each and every time when they need to take amount from us, they need to ask our permission

Even the bank loan EMI debit will hit due to this new rule by Reserve Bank of India. For this payments to be successful, banks should send pre-debit message to the customers at least 24 hours prior to the payment

The new conditions prescribed by RBI require a cohesive effort by all stakeholders including Card Issuing Banks, Merchant Acquiring Banks, Card Networks and Merchants. A common industry-wide platform is being developed and HDFC Bank has completed its internal development and integrations

ACTION NEEDED / BEWARE OF

From this month (October 2021) onwards watch your payments carefully and authorize only the one which are required. Do not be careless in approving all messages which you receive. Your careless approval might cause some hackers to withdraw all your hard earned money

Have a Great Day

B G Nareshkumar