The central bank has okayed the use of debit cards and net banking for auto-debiting of amounts towards recurring payments, said a circular by retail payments body National Payments Corporation of India (NPCI).
News of the development comes almost five months after NPCI suspended Aadhaar-based verification for auto-debit of amounts towards recurring payments such as those related to loans and insurance.
Aadhaar is an identity system.
The NPCI’s suspension order came as an outcome of a Supreme Court verdict in September that disallowed private players from using the 12-digit unique Aadhaar number for verification purposes.
Kotak Mahindra Bank has gone live with both net-banking-based and debit-card-based verification for its customers. Other banks reportedly have not gone for both.
Shekhar Bhandari, senior executive vice-president and business head of global transaction services, Kotak Mahindra Bank, said, “In a first-of-its-kind initiative in the industry, customers can register both physical and e-mandates on a single platform. E-mandates have a number of advantages over physical mandates, most notably in terms of security, costing, operational efficiency and turnaround time.”
An executive with an agency working on debit card and net banking solutions said, “NPCI has ensured that lenders seeking certification as sponsor banks will also have to register as donor banks. This has increased adoption of net-banking-based and debit-card-based e-mandates among the banks.”
NPCI has asked all member-banks to implement net-banking-based and debit-card-based e-mandates within two months.