Introduction: The Reserve Bank of India (RBI) has recently issued a significant circular, marked as RBI/2023-2024/88, dated December 12, 2023. Addressed to all Scheduled Commercial Banks, including various financial institutions, the circular outlines crucial updates regarding the processing of e-mandates for recurring transactions.
Detailed Analysis: Referring to a previous circular (CO.DPSS.POLC.No.S-518/02.14.003/2022-23 dated June 16, 2022), the RBI had relaxed the Additional Factor of Authentication (AFA) for e-mandates and standing instructions. This relaxation applied to cards, Prepaid Payment Instruments, and Unified Payments Interface (UPI), specifically for recurring transactions with values up to ₹15,000, subject to certain conditions.
As per the recent announcement in the Statement on Developmental and Regulatory Policies dated December 08, 2023, the RBI has decided to make a significant adjustment to the transaction limits. The limit has been increased from ₹15,000 to ₹1,00,000 per transaction. This increase applies to specific categories, namely, (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.
The circular, issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), is set to come into effect immediately. This development signifies a notable change in the regulatory framework governing e-mandates and recurring transactions, impacting a wide range of financial institutions.
Conclusion: In conclusion, the RBI’s move to raise the transaction limits for e-mandates reflects a proactive approach to adapt to evolving financial landscapes. With the increased limits for specific transaction categories, the central bank aims to foster smoother and more convenient financial transactions while ensuring the necessary regulatory safeguards. Financial institutions and stakeholders should take note of these changes to align their processes accordingly.
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Reserve Bank of India
RBI/2023-2024/88
CO.DPSS.POLC.No.S-882/02.14.003/2022-23
December 12, 2023
The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks, including Regional Rural Banks /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks / Payments Banks /
Small Finance Banks / Local Area Banks /
Non-bank Prepaid Payment Instrument issuers / Authorised Card Payment Networks /
National Payments Corporation of India
Madam / Dear Sir,
Processing of e-mandates for recurring transactions
A reference is invited to our circular CO.DPSS.POLC.No.S-518/02.14.003/2022-23 dated June 16, 2022 in terms of which relaxation in Additional Factor of Authentication (AFA) was permitted while processing e-mandates / standing instructions on cards, Prepaid Payment Instruments and Unified Payments Interface, for subsequent recurring transactions with values up to ₹15,000/-, subject to conditions listed therein.
2. In this regard, as announced in the Statement on Developmental and Regulatory Policies dated December 08, 2023, it has been decided to increase the limit from ₹15,000/- to ₹1,00,000/- per transaction for the following categories: (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.
3. This circular is issued under Section 10 (2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and shall come into effect immediately.
Yours faithfully,
(Gunveer Singh)
Chief General Manager-in-Charge
