RBI's new auto-debit rules begin TODAY - What gets affected, what not

Today is October 1 and with this, the auto-debit feature comes to an end as the Reserve Bank of India's Additional Factor Authentication (AFA) rules come into force.

The Reserve Bank of India (RBI) had released a statement recently by which financial firms would be required to obtain additional step verification from their customers for the auto-debiting feature starting October 1, 2021.

Bank account users who use their debit/credit cards or mobile wallets for regular auto-debit activities will be affected by this change. Any regular payments over Rs 5,000 would be subject to this rule.

Additional Factor Authentication (AFA) will be required under the new regulation, which is scheduled to be effective immediately from next month. Payments made with debit cards, credit cards, UPI, or any other prepaid payment device will be included. Banks and financial organizations will have to notify their customers at least 24 hours before the auto-deduction takes place.

AFA Rules from October 1, 2021

- RBI's Additional Factor Authentication Rules to come into force

- Other service payments including utility bill, OTT subscription will not be debited automatically  

- AFA rules applicable to auto payments linked to debit cards, credit cards, prepaid cards

- New rules are also required for all auto-debits below Rs 5,000

- Auto debit payment only after customer's approval
- Banks must send a notification 24 hours before the payment due date
- Customers will have a chance to change or cancel payments
- Customer's approval required on notification
- OTP required on payment above Rs. 5000
- Guidelines keeping in view banking fraud and customer safety
-Banks inform customers about changes in rules

Which payments could be affected?

- OTT subscription
- Utility Bill Payment
- News Website Subscription

Payments related to bank accounts will not be affected:

- Home Loan, Auto Loan EMI
- Mutual Fund SIP
- Insurance Premium Payments