New Delhi: Often, money is automatically deducted from bank accounts without the account holder’s knowledge, causing inconvenience to people. Such unauthorised deductions leave account holders anxious and worried. While concerns regarding unannounced deductions from bank accounts have persisted in the past, this will no longer be the case.
Key Takeaways
Quick Read- Mandatory Alert: You must receive a notification (via SMS or email) at least 24 hours before any money is debited.
- What the Alert Includes: The name of the merchant, the exact amount, the date/time of the debit, and the reference number of your mandate.
- Above ₹15,000: For most transactions exceeding this amount, an OTP is still mandatory for every payment.
To alleviate these concerns among account holders, the RBI has now implemented new regulations regarding e-mandates. Following these significant changes, the auto-debit system has become far more secure than before. These new changes will benefit individuals whose accounts are subject to automatic monthly deductions for EMIs, subscriptions, or utility bills. You can find all the essential details regarding these changes in this report.
Key Highlights
The “24-Hour” Warning Rule
Banks and service providers are no longer allowed to deduct money without warning.
- Mandatory Alert: You must receive a notification (via SMS or email) at least 24 hours before any money is debited.
- What the Alert Includes: The name of the merchant, the exact amount, the date/time of the debit, and the reference number of your mandate.
- The “Opt-Out” Power: If you see an incorrect amount or a subscription you no longer want, the alert must provide a way for you to cancel or opt out of that specific transaction before the money leaves your account.
2. Streamlined Transaction Limits
The RBI has updated the thresholds for when you need to provide an OTP (Additional Factor of Authentication):
- Up to ₹15,000: Recurring payments (like OTT, utility bills, or small EMIs) can now happen automatically without an OTP once the initial mandate is registered.
- Above ₹15,000: For most transactions exceeding this amount, an OTP is still mandatory for every payment.
Prior Notification Before Deduction
According to the RBI’s new regulations, the most significant change is that customers must now be notified before any auto-payment transaction. Furthermore, the bank or the concerned service provider is required to send an alert at least 24 hours in advance. This alert will include the name of the company, the amount to be deducted, the date of deduction, and other necessary details.
This ensures that account holders are informed in advance about exactly when and how much money is scheduled to be deducted from their accounts. If anything appears incorrect or unauthorised, customers can take timely action to stop the transaction.
Is Permission Required Before Auto-Payments?
As per the RBI’s regulations, customers must now complete a one-time registration process before activating any auto-payment facility. This process now mandates an additional layer of verification for account holders. No auto-debit facility can be activated without the explicit consent of the customer. This measure is expected to significantly enhance the security of bank accounts.
Services Covered Under the New Regulations
The new regulations regarding auto-payments will apply to a wide range of essential services. These include services such as OTT subscriptions, insurance premiums, utility bills (electricity and water), and EMIs. Additionally, auto-debits processed via credit/debit cards, UPI, or prepaid instruments will also fall under the purview of these new regulations.
