The Reserve Bank of India (RBI) on Wednesday extended the deadline for e-mandate for recurring payments of online transactions by six months till September 30, 2021, while coming down heavily on banks for not implementing the system on time, threatening “stringent supervisory action” if the deadline is missed again.
“To prevent any inconvenience to the customers, Reserve Bank has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021”, the RBI said.
This comes after banks started informing customers about canceling the service of e-mandates for auto-debit of funds from cards. Leading private banks have started sending messages to their customers that they will have to transact on their own for services they want to avail, instead of banks deducting the fee automatically on their behalf as banks, as well as other stakeholders, had not readied their systems to comply with the new framework.
In the circular issued by RBI, it said, the framework has not been fully implemented even after the extended timeline.
The RBI has come down heavily on the banks and other stakeholders on delay in implementing the norms and has warned that if there is any further delay in implementing these norms beyond the extended deadline then it will be met with stringent supervisory action.
“This non-compliance is noted with serious concern and will be dealt with separately. The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action,” RBI said.
The new norms were supposed to kick in from April 1 but neither banks nor the other stakeholders in the ecosystem had readied their system. RBI had issued the notification in August 2019, wherein it had said, recurring payments through debit and credit cards will require banks to check with customers by notifying them and getting their approval before processing such transactions.
The primary objective of the framework, according to RBI, was to protect customers from fraudulent transactions and enhance customer convenience.
“In the interest of customer convenience and safety in the use of recurring online payments, the framework mandated use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of Rs2,000, since enhanced to Rs5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc,” said RBI.
In a letter, the Internet and Mobile Association of India (IAMAI) had requested the NITI Aayog to provide non-banking entities, such as payment aggregators and merchants another 3-6 months to comply with the norms. “We would like to reiterate that merchants and non-banking entities are completely reliant on the issuer banks for the upgrade to the new infrastructure to further align with the compliance requirements at their individual ends. We believe that non-extension of the timeline will cause an abrupt disruption to the businesses within the ecosystem.”