New Update on E-Mandate Processing for Recurring Transactions: Limit Increased to ₹1,00,000

Introduction:

In a significant move to enhance the convenience of digital transactions, the Reserve Bank of India (RBI) has recently announced an update on the processing of e-mandates for recurring transactions. This article delves into the details of this new development, which marks a substantial increase in the transaction limit for e-mandates.

Background:

The RBI's circular CO.DPSS.POLC.No.S-518/02.14.003/2022-23, dated June 16, 2022, initially provided a relaxation in the Additional Factor of Authentication (AFA) for e-mandates or standing instructions on cards, Prepaid Payment Instruments (PPIs), and the Unified Payments Interface (UPI). This relaxation was applicable for recurring transactions up to ₹15,000, subject to specific conditions.

Recent Update:

As per the latest announcement in the Statement on Developmental and Regulatory Policies dated December 08, 2023, the RBI has decided to increase the transaction limit for e-mandates. The new limit has been set at ₹1,00,000 per transaction. This enhancement applies to specific categories, including:

• Subscription to mutual funds
• Payment of insurance premiums
• Credit card bill payments

This move is aimed at providing greater flexibility and ease for users engaging in these types of recurring transactions.

Legal Framework:

The recent circular is issued under the authority of Section 10 (2) in conjunction with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). The provisions of this circular have come into effect immediately, signaling a swift implementation of these changes.

Implications:

This increase in the transaction limit for e-mandates is expected to have several positive implications:

Enhanced Convenience: Customers can now authorize higher-value recurring transactions without the need for additional authentication steps each time.
Boost for Digital Payments: This move will likely encourage more users to opt for digital channels for recurring payments, thereby promoting digital financial inclusion.
Benefit to Service Providers: Companies offering services like mutual funds, insurance, and credit cards will potentially see an increase in digital payment adoption, reducing transaction costs and enhancing customer experience.

Conclusion:

The RBI's decision to increase the transaction limit for e-mandates to ₹1,00,000 is a forward-looking step that aligns with the growing trend of digital financial transactions in India. It simplifies the process for consumers and supports the digital economy's growth. As we move towards a more digitally empowered financial environment, such measures are crucial in fostering trust and convenience in digital transactions.