RBI Hikes E-Mandate Limit For Recurring Payments To INR 1 Lakh

SUMMARY

The increase in limit will be applicable for subscriptions to mutual funds, payment of insurance premiums and credit card bill payments

With the increase in this limit for recurring payments, customers can now schedule automated debits up to INR 1 Lakh without the need for an additional factor of authentication

Earlier in June 2022, RBI raised this limit from INR 5,000 to INR 15,000 per transaction across all online subscription categories

The Reserve Bank of India (RBI) has announced to raise the limit under e-mandates for making payments of recurring nature to INR 1 Lakh from INR 15,000 per transaction.

“It has been decided to increase the limit from INR 15,000 to INR 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,” the RBI said in a circular on Wednesday (December 13).

With the increase in this limit for recurring payments, customers can now schedule automated debits up to INR 1 Lakh without the need for an additional factor of authentication (AFA).

The RBI’s new regulations on e-mandates became effective in October 2021. Initially, the rules pertained to recurring payments via cards and stipulated that subscriptions of over INR 5,000 would have to be processed with a one-time password (OTP). Besides, card issuers must send a pre-transaction notification to the cardholder at least 24 hours before any automated debit. In June 2022, the RBI raised this limit from INR 5,000 to INR 15,000 per transaction.

The central bank has been tightening rules to make card transactions more safer. It also framed guidelines for card tokenisation in 2020 aiming to make card transactions more secure. The deadline for implementing the card tokenisation framework has been extended twice and will come into effect from July 1, 2022.

However, RBI’s Recurring Payments Guidelines have severely impacted SMEs and startups offering monthly or annual subscription-based services, OTT platforms, and international giants offering services in India, thereby impacting the overall Indian subscription economy, which boomed during the pandemic.

Inc42 in its FICCI-EY 2022 report, projected a compound annual growth rate (CAGR) of 24% for digital subscriptions until 2024. However, this has now been trimmed to 11% CAGR until 2025. Similarly, the estimated number of OTT subscribing households has been adjusted from 60 Mn in 2024 to 52 Mn in 2025.