RBI Approves E-Mandates For Internet Banking, Debit Cards

The National Payments Corporation of India (NPCI) has received approval from the Reserve Bank of India for implementing e-mandates for both internet banking and debit cards. This will allow the users to now automatically pay their recurring payments.

In its circular, NPCI has informed all the member banks to take immediate measure and implement both the variants within June 30. The limit for each mandate is set at INR 1 Lakh, and depending on the usage, the organisation will review the limit in due course.

“It may be noted that NACH (National Automated Clearing House) mandates can be used for business to business (B2B) collections, all types of investments and insurance products, utility payments, government payments, trades receivables, all types of loan repayments, asset rentals and collection of education/society charges,” the circular noted.

For the uninitiated, services such as e-NACH and e-Mandate are easier ways for merchants and their buyers to easily pay their recurring payments such as bills, insurance premiums, utility bills etc. However, both of them are two different services. While e-NACH services are controlled by NPCI and is available at over 40 banks, e-mandates are provided by individual banks.

Currently, private sector banks such as Yes Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank have gone live with e-Mandates. Central Bank of India, Bank of Baroda and Punjab National Bank are some of the public sector banks that offer the services. Kotak Mahindra Bank is the only lender that has gone live for both netbanking and debit card-based mandates.

In December 2018, it was reported that NPCI has been pushing the banks to sign up for electronic verification of customers through channels like net banking and debit cards, as an alternative to the Aadhaar-based process.

In line with the Supreme Court’s verdict on Aadhaar, NPCI had suspended Aadhaar-based digital payments solution, e-NACH. Following this, banks and fintech players have been looking to use API-based e-mandate process through internet banking and debit cards-based authentication.

With the increasing penetration of the internet, people are switching over to digital modes of payments. Apart from the use of online wallets and UPI transfers, people have also stepped into internet banking. According to a BCG report, the number of users opting for online banking is expected to reach 150 Mn by 2020 in India.

Update 1: April 26, 2019 | 06:30 PM

In reference to the circular, NPCI also notified that the customers will get to set the mandate on their underlying back account using the NACH platform. The users will have a choice to use either use internet banking or debit card credentials to authenticate the mandate which is two-factor authentication complaint validated by the user’s bank.