The Reserve Bank of India (RBI) on Wednesday extended the timeline by six months to comply with its guidelines related to recurring online transactions with Additional Factor of Authentication (AFA), but reprimanded players that the non-compliance is a "serious concern". “The delay in implementation by some stakeholders has given rise to a situation of possible large-scale customer inconvenience and default,” RBI said in a statement.

RBI had directed all banks including RRBs, NBFCs, and payment gateways to comply with AFA for automatic recurring payment by March 31, 2021, in order to make digital transactions safe and protect customers from fraudulent transactions.

However, some of the players failed to meet the deadline and approached the RBI seeking an extension of the deadline.

"Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action," RBI cautioned.

In August 2019, the RBI had issued a framework for processing e-mandates on recurring online transactions. Initially applicable to cards and wallets, the framework was extended in January 2020 to cover Unified Payments Interface (UPI) transactions as well.

The statement said the requirement of AFA has made digital payments in India safe and secure.

In the interest of customer convenience and safety in the use of recurring online payments, the framework mandated use of AFA during registration and first transaction (with relaxation for subsequent transactions up to a limit of Rs 2,000, since enhanced to Rs 5,000), as well as pre-transaction notification, facility to withdraw the mandate, etc, it said.

"The primary objective of the framework was to protect customers from fraudulent transactions and enhance customer convenience. Based on a request from the Indian Banks' Association (IBA) for an extension of time till March 31, 2021, to enable the banks to complete the migration, RBI had advised the stakeholders in December 2020 to migrate to the framework by March 31, 2021. Thus, adequate time was given to the stakeholders to comply with the framework," it said.

Commenting on the decision of RBI, Anshuman Verma, Director at Bridge Inventions said this is a welcome step by the central bank and industry players have got the final grace period.

The industry will ensure compliance with the RBI directive in the interest of safe and secure digital transactions, he added.