RBI's new rules: No alerts on auto-replenishment of balances in FASTag, NCMC. What does this mean?

The Reserve Bank of India (RBI) has issued updated rules of e-mandate framework, under which banks won't issue any pre-debit notification on auto-replenishment of some of the services, like FASTag and the National Common Mobility Card (NCMC). This has been done to streamline recurring transactions that lack fixed periodicity.

The central bank, in a circular on Thursday, stated that auto-replenishment of balances in FASTag and NCMC, which triggers whenever the balance drops below a customer-defined threshold, will now be covered under the existing e-mandate framework. These transactions, being recurring but irregular in terms of timeframe, will be exempt from the usual requirement of sending a pre-debit notification to customers 24 hours before the actual charge.

"Reference is also drawn to the Statement on Developmental and Regulatory Policies dated June 07, 2024, wherein it was announced that auto-replenishment of balances in FASTag and National Common Mobility Card (NCMC), which are recurring in nature but without any fixed periodicity, would be facilitated under the e-mandate framework. It has been decided to include auto-replenishment of FASTag and NCMC, as and when the balance falls below a threshold set by the customer, under the e-mandate framework. Payments for auto-replenishment, since they are recurring in nature but without any fixed periodicity, will be exempt from the requirement of pre-debit notification. All other instructions provided under the e-mandate framework shall continue to remain applicable," the notification stated. 

As outlined in the e-mandate framework regulation, it is stipulated that the issuing party is required to dispatch a pre-debit notification to the client a minimum of 24 hours in advance of the scheduled debit transaction from the account.

In its June notification, the RBI stated: “It is now proposed to include payments, such as replenishment of balances in Fastag, NCMC, etc. which are recurring in nature but without any fixed periodicity, into the e-mandate framework. These categories of payments are made as and when needed and, therefore, their replenishment is not time specific or amount specific. Under the e-mandate framework, it is proposed to introduce an automatic replenishment facility for such payments. The automatic replenishment will be triggered when the balance in Fastag or NCMC falls below a threshold amount set by the customer.”

The e-mandate framework was first introduced through a series of circulars from 2019 onwards to protect customers by providing advance notice of forthcoming debits from their accounts. In its most recent update, the RBI recognises the importance of accommodating the requirement for flexibility, especially in situations where transactions are routine and essential for the smooth operation of services such as toll payments and topping up mobility cards.

In 2019, the RBI said: “As a risk mitigant and customer facilitation measure, the issuer shall send a pre-transaction notification to the cardholder, at least 24 hours prior to the actual charge / debit to the card. While registering e-mandate on the card, the cardholder shall be given facility to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification from the issuer in a clear, unambiguous manner and in an understandable language. The facility for changing this mode of receiving pre-transaction notification, shall also be provided to the cardholder.”