The Reserve Bank of India has given the go-ahead for electronic mandates through both debit cards and netbanking in place of the earlier Aadhaar-based authentication, paving the way for banks and fintech companies to auto-debit recurring payments such as for home loans and mutual funds, Economic Times reported.
The National Payments Corporation of India (NPCI) received the final approval from the banking regulator on April 15. It has asked banks to implement both the e-mandate measures by June 30.
The NPCI was pushing banks to begin onboarding the new form of e-mandates after the Aadhaar-based mandate system was disallowed following an order by the Supreme Court.
"This move will definitely help banks and fintech companies trying to get recurring payments authentication from customers," said a top executive of a Mumbai-based digital payments company which offers National Automated Clearing House (NACH) services to companies. NACH is run by NPCI to process e-mandate transactions.