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Customers to face disruption as only 60% banks are auto debit norm ready

With the Reserve Bank of India’s new auto-debit norms coming into effect from Friday, consumers may face some disruption as only about 60 per cent of the banks are ready with a new system.

Industry experts say that most public sector banks are still working to meet the RBI requirement. For example, auto debit on State Bank of India’s debit card will go live only by mid-October while its credit card system is set up to meet the norms starting tomorrow.

Private lenders, including HDFC Bank, ICICI Bank, Citibank, IDFC Bank and Axis Bank, are ready, while others such as IndusInd Bank, Bank of Baroda, RBL Bank and YES Bank are geared to meet the deadline.

Shashank Kumar, CTO and co-founder, Razorpay, said, “In the long run, the RBI norms are good for the ecosystem and will benefit the consumer. But, in the short term, the September 30 deadline can cause a lot of confusion for existing mandates. Where the cards have not migrated to the new system or banks that have not complied, the mandates will not be processed.”

Sounding off customers

Banks and credit card companies have already sent communications to customers informing them about the changes and their state of readiness. Customers of banks, which are yet to comply, will face disruption in payment of utility bills, OTT subscriptions, etc. However, mandates for SIPs, mutual funds and EMIs, set up through bank accounts, will not be affected.

To ensure a smooth transition for customers, the Payments Council of India has requested the RBI to extend the norms for auto debit mandates for recurring transactions by one to two months.

Extension sought

“We have written to the RBI for a short extension of one or two months to ensure a smooth transition to the new norms. All ecosystem players have been working hard but it will take some more time,” said Vishwas Patel, Chairman, Payments Council of India and Executive Director, Infibeam Avenues Limited.

Mandar Agashe, Founder, Vice-Chairman and MD, Sarvatra Technologies, said, “With the new regulations, customers will now be required to re-register each of their payment instruments — be a debit or credit card or UPI for service under the recurring mandate. Post-re-registration, the first transaction will have to be executed via additional factor authentication (AFA) by approving the auto-debit request beforehand. Transactions above ₹5,000, will require OTP verification every time.”

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