Why RBI's 'auto-debit rules' could save you from fraud
What's the story
Financial management is key in the modern world. Auto-debit facilities help us make timely payments, without the hassle of remembering due dates.
However, with RBI's new rules in effect from October 1, 2021, it's important to understand the changes to maintain security and control over your transactions.
This article breaks down these updates for Indian bank account holders, to help you navigate the changes with ease.
Transaction types
Know your auto-debit transactions
Auto-debit transactions: These are the ones where payments get automatically deducted from your bank account for utilities, subscriptions, and loan EMIs. You don't have to remember the dates etc.
Under RBI's new guidelines effective October 1, 2021, any auto-debit transaction above ₹5,000 will now require an additional one-time password (OTP) for verification.
This measure is intended to enhance security and provide users with greater control over their high-value transactions.
E-mandate setup
The e-mandate registration process
To initiate auto-debit under the new guidelines, you need to register for an e-mandate.
This includes authenticating your identity with an OTP sent to your registered mobile number or email ID and agreeing to the terms and conditions online.
After registering for an e-mandate on a particular service provider's website, you can make transactions up to ₹15 lakhs without requiring OTP authentication for every transaction.
Enhanced communication
Additional notifications for better control
One major benefit of the new auto-debit rules is the improved communication between banks and customers.
Banks now have to send pre-transaction notifications (at least 24 hours in advance) before debiting the amount from your account.
This notification includes key details like transaction amount, date, and payee name.
This way, you have enough time to either maintain sufficient balance in your account or cancel the transaction if you want.
Simplified cancellation
Opting out made easy
Cancelling an auto-debit mandate is a breeze with the new rules!
You can now cancel your e-mandate directly through your bank's website or mobile app. No more calling customer service or making trips to the branch.
This change makes managing your automated payments more secure and convenient. Say goodbye to payment headaches and hello to easy financial control.