The Reserve Bank of India (RBI) has issued a new circular concerning the processing of e-mandates for recurring transactions. This circular draws reference to previous guidelines, particularly those outlined in circular DPSS.CO.PD.No.447/02.14.003/2019-20 dated August 21, 2019, and other related circulars, collectively referred to as the “e-mandate framework.”
The e-mandate framework was established to enhance security and transparency in recurring transactions. Under this framework, issuers are required to send a pre-debit notification to customers at least 24 hours before a charge or debit is made to their account. This notification gives customers time to review and, if necessary, dispute the charge before it is processed, offering an additional layer of protection for consumers in managing recurring payments.
The circular also highlights developments outlined in the Statement on Developmental and Regulatory Policies issued on June 7, 2024. This statement announced an important update regarding the auto-replenishment of balances in FASTag and the National Common Mobility Card (NCMC). Both FASTag and NCMC are systems used for toll payments and public transport, respectively, and their auto-replenishment functions, while recurring, do not follow a fixed periodicity. The update extends the e-mandate framework to include these auto-replenishment transactions.
The circular explains that auto-replenishment of FASTag and NCMC balances will be triggered when the balance falls below a threshold set by the customer. Since these transactions are recurring but do not occur on a regular schedule, they will be exempt from the requirement of a pre-debit notification. This exemption is intended to facilitate seamless automated payments while maintaining the integrity of the e-mandate framework for more regular recurring transactions.
Despite this exemption, the circular reaffirms that all other provisions of the e-mandate framework will continue to apply. This ensures that the broader security measures designed to protect consumers remain in place for most recurring payments.
Finally, the circular has been issued under Section 18, read alongside Section 10 (2), of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). This legislation provides the legal basis for the regulation of payment systems in India. The updated provisions will come into effect immediately, further streamlining the process of managing recurring transactions and enhancing customer convenience through automated, rule-based payments.
