The Reserve Bank of India has given final nod to electronic mandates via both debit cards as well as netbanking in place of the earlier Aadhaar based authentication, enabling banks and fintech companies to auto-debit recurring payments such as for home loans and mutual funds.
The National Payments Corporation of India (NPCI) has received the final go-ahead from the central bank earlier this month and the retail payments body has now directed the banks to implement both the e-mandate measures by June 30.
When Aadhaar was used by financial entities, customer verifications were done through the citizen’s database. Post the access restriction, banks looked for alternative modes of authenticating its customers.
Earlier, e-Mandates were used by banks and other fintech companies for auto-debiting multiple recurring payments namely equated monthly installments (EMIs) or payments for systematic investment plans.
Till date, YES Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank are the private players to implement this service, while Central Bank of India, Bank of Baroda and Punjab National Bank are the public lenders who have started the service. Prior to all others, Kotak Mahindra Bank is the first and the only lender to have gone live with both net banking and debit card-based mandates.