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  Business   In Other News  01 Apr 2021  RBI extends timeline to comply with new rule for online transactions by 6 months

RBI extends timeline to comply with new rule for online transactions by 6 months

THE ASIAN AGE. | FALAKNAAZ SYED
Published : Apr 1, 2021, 7:41 am IST
Updated : Apr 1, 2021, 8:42 am IST

The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience

In August 2019, the Reserve Bank of India (RBI) had issued a framework for processing of e-mandates on recurring online transactions. — Representational image
 In August 2019, the Reserve Bank of India (RBI) had issued a framework for processing of e-mandates on recurring online transactions. — Representational image

Mumbai: The Reserve Bank of India (RBI) on Wednesday extended the timeline for lenders, financial institutions and payment gateways to comply with its guidelines related to recurring online transactions with Additional Factor of Authentication by six months till September 30. This is the second time that regulator has extended the deadline as several players have failed to implement the framework which could have impacted recurring payments of customers such as of utility bills, recharge of phone, DTH among others, post March 31 and led to large scale defaults.

To make digital payments in India "safe and secure", the banking regulator introduced Additional Factor of Authentication (AFA) and directed all banks including Regional Rural Banks, Non Banking Finance Companies (NBFCs) and payment gateways to comply with AFA for automatic recurring payment by March 31, 2021, in order to make digital transaction safe and protect customers from fraudulent transactions.However, some of the players failed to meet the deadline and approached the RBI seeking extension of the deadline.

 

"It is, however, noted that the framework has not been fully implemented even after the extended timeline. 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," RBI said in its statement.

"To prevent any inconvenience to the customers, Reserve Bank of India has decided to extend the timeline for the stakeholders to migrate to the framework by six months, i.e., till September 30, 2021," it said.

"Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action," the RBI warned.

 

In August 2019, the Reserve Bank of India (RBI) had issued a framework for processing of e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.

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 Rs 2,000, since enhanced to Rs 5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc, it said.

"The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience. Based on a request from Indian Banks' Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, Reserve Bank had advised the
stakeholders in December 2020 to migrate to the framework by March 31, 2021. Thus, adequate time was given to the stakeholders to comply with the framework," it said.

 

Tags: online payment, reserve bank of india, additional factor of authentication, online payment new rule, rbi extends to comply with additional factor of authentication, indian banks association
Location: India, Maharashtra, Mumbai (Bombay)