NEW DELHI: The Reserve Bank of India has made new auto-debit rules which require banks to inform customers in advance about recurring payments due, mandatory from Friday. With effect from October 1, all standing instructions on cards will not be honoured.
As per the guidelines, customer consent is required through an Additional Factor Authentication (AFA) like One Time Password (OTP), if the customer is setting up a new standing instruction/recurring transaction for auto-debit to their account via their debit or credit cards on a merchant like Netflix or a recurring insurance payment etc., explains Puneet Kapoor, President - Products, Alternate Channels and Customer Experience Delivery, Kotak Mahindra Bank.
“Thereafter, customers will also receive a pre-debit notification at least 24 hours before the actual date of deduction of the amount and will have an option to view/ modify/delete the recurring transaction. Further, for recurring transactions above Rs 5,000, customers will have to authenticate the transaction using an OTP,” Kapoor said, adding Kotak Mahindra Bank is in full compliance with the regulations and has introduced an e-mandate solution for customers. Any payment request beyond the maximum amount will need OTP-based authentication at the time of transaction.