BAJAJ BROKING
July 16, 2025
4 mins read
Understanding how recurring payments operate in the digital financial system is relevant for individuals managing their finances. A core component of this system is the 'mandate amount'. When you authorise a recurring payment, such as a loan EMI, a utility bill, or an investment instalment, you are setting up a mandate. The mandate amount refers to the maximum sum that can be automatically deducted from your bank account for a specific recurring payment. This amount is predetermined and authorised by the account holder, ensuring that no funds exceeding this limit are debited without additional approval. This mechanism contributes to a streamlined payment process while maintaining a level of control for the account holder.
The concept of a mandate amount is integral to various digital payment solutions, particularly e-mandates. These digital mandates have replaced older, paper-based systems like Electronic Clearing Service (ECS) mandates. The shift to e-mandates aims to make the authorisation process quicker, more efficient, and less prone to manual errors. By setting a mandate amount, individuals permit a service provider or financial institution to initiate debits from their account up to that specified limit, at a pre-defined frequency. This system supports timely payments for recurring expenses and investments, potentially reducing the risk of missed payments or late fees.
The implementation of a mandate amount serves a dual purpose. From the perspective of the payer, it provides a boundary for automated deductions, contributing to financial control and preventing unexpected high debits. From the perspective of the service provider, it simplifies the collection of recurring payments, reducing the administrative burden associated with manual collections. This framework allows for a more organised approach to managing regular financial commitments in the digital environment.
A mandate amount is the predefined maximum limit that an account holder sets for automatic or recurring deductions from their bank account. When you set up an AutoPay or an e-mandate for a service, you specify this amount. This figure acts as an upper ceiling for any single transaction under that mandate. For instance, if you authorise a mandate for a monthly subscription with a mandate amount of ₹1,000, the service provider can only deduct up to ₹1,000 in any given month for that specific subscription. If the actual bill for that month is ₹800, only ₹800 will be debited. However, if the bill were ₹1,200, the system would typically not allow the debit to proceed for the full amount without further authorisation, or it might fail if it exceeds the set limit.
The purpose of a mandate amount is to provide a safeguard for the account holder. It ensures that automatic debits do not exceed an expected threshold, helping to prevent unauthorised or excessively high deductions. This mechanism is particularly relevant for variable recurring payments, where the exact amount due might fluctuate within a certain range. For fixed payments, the mandate amount usually matches the exact recurring payment. It is a fundamental component of the digital payment authorisation process, allowing for both convenience and a degree of financial control for the individual. Financial institutions and payment service providers facilitate the setting and enforcement of these mandate amounts.
E-mandate is a digital payment solution that facilitates recurring payments without manual intervention for each transaction. It was introduced by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) to streamline recurring payments. The process typically involves several steps:
The process begins when an individual provides consent to a service provider (merchant, utility company, mutual fund house, etc.) for automatic deductions. This consent is usually given by filling out an e-mandate form online through a website or application.
The payer then authenticates this consent using an additional factor of authentication (AFA). This typically involves using online banking credentials (Net Banking) or debit card details, often followed by a One-Time Password (OTP) verification. This step confirms the payer's identity and their agreement to the mandate.
Once authenticated, the e-mandate request is typically sent to the National Payments Corporation of India (NPCI) for registration and validation. NPCI operates the National Automated Clearing House (NACH) system, which is the backbone for processing these recurring payments.
NPCI verifies the mandate and then forwards it to the payer's bank. The payer's bank conducts its own verification to ensure the authenticity and validity of the mandate before activating the recurring payment instruction on the account.
Once the e-mandate is active, the service provider can initiate debit requests as per the agreed schedule (e.g., monthly, quarterly). For transactions up to ₹1 lakh, payments can be auto-debited without needing further authentication for each payment. For transactions exceeding ₹1 lakh, each payment usually requires separate additional factor authentication (AFA), such as an OTP.
Banks are mandated to send a pre-debit notification to the customer at least 24 hours before processing any recurring payment. This notification informs the customer about the upcoming deduction, allowing them to review, pause, or cancel the transaction if needed.
The terms "Auto Pay limit" and "mandate limit" both refer to the maximum financial threshold set for automated, recurring deductions from a bank account. This limit is established by the account holder when they authorise a standing instruction or an e-mandate for a particular service or payment.
The purpose of this limit is to provide the account holder with a mechanism to control the maximum amount that can be debited from their account in a single instance or within a specific period, as per the mandate's terms. It acts as a protective measure, ensuring that even if there are variations in the amount to be paid (for example, in utility bills), the deduction does not exceed a pre-authorised level.
For payments that are fixed, such as loan EMIs or fixed mutual fund SIPs, the AutoPay or mandate limit is typically set to the exact amount of the recurring payment. For variable payments, the limit is often set slightly higher than the expected maximum possible payment to accommodate fluctuations while still providing a cap. If a scheduled payment exceeds the established AutoPay or mandate limit, the transaction may require additional authentication from the account holder or might be declined by the bank, depending on the specific rules of the mandate and the bank. This feature helps individuals manage their finances by balancing the convenience of automation with the need for financial oversight.
The maximum amount that can be set for a mandate, particularly for recurring payments under the e-mandate framework in India, has specific regulatory guidelines. As per directives from the Reserve Bank of India (RBI) and National Payments Corporation of India (NPCI), the current maximum limit for recurring transactions through the e-mandate facility, specifically for UPI AutoPay, is ₹1 lakh per transaction.
This means that for recurring payments up to ₹1 lakh, once the e-mandate is successfully set up and authenticated with a one-time additional factor authentication (AFA), subsequent payments can be auto-debited without requiring further authentication for each individual debit.
However, for recurring transactions that exceed ₹1 lakh, each payment requires separate additional factor authentication (AFA) from the user. This measure is in place to enhance security for higher-value transactions, ensuring that explicit consent is obtained for each larger deduction.
It is important to note that while the regulatory limit is ₹1 lakh for automated deductions without repeated AFA, individual banks or service providers might set their own lower limits based on their internal risk management policies. Therefore, while the overarching regulatory framework permits up to ₹1 lakh for fully automated recurring payments, it is advisable for individuals to check the specific limits applied by their bank and the service provider for whom the mandate is being set up. For certain types of mandates, such as those related to securities or mutual fund investments, a higher overall mandate limit might be allowed, but the per-transaction AutoPay limit typically adheres to the RBI guidelines.
Understanding the concept of a mandate amount and how e-mandates function is relevant for anyone engaging in digital transactions. This system is designed to provide a structured way for managing recurring payments, blending the convenience of automation with necessary financial controls. By setting clear limits and undergoing authentication, individuals can facilitate their regular payments while maintaining oversight of their bank account activities. The framework surrounding e-mandates aims to create a secure and efficient environment for various financial commitments in the digital landscape.
Disclaimer: This article provides general information regarding mandate amounts and e-mandates in India. Regulatory guidelines and bank policies can change. Users should verify specific details with their financial institutions or service providers.
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If a scheduled payment exceeds the pre-set mandate amount, the transaction may be declined by your bank or require additional authentication (e.g., an OTP) before it can proceed. It will not be automatically debited if it surpasses the authorised maximum limit.
Yes, you can generally change your mandate amount. The process typically involves submitting a request through your bank's online portal, mobile app, or by contacting the service provider. The change will usually require re-authentication to update the mandate details.
An e-mandate can have a validity period depending on its purpose. For many recurring payments, e-mandates can remain valid for a maximum of 25 years. However, specific mandates might be set for shorter durations or until a certain number of payments are completed.
While many banks do not charge a fee for setting up an e-mandate for common services, some financial institutions or specific service providers might levy a nominal charge for the registration or processing of an e-mandate. It is advisable to check with your bank.
Yes, you can cancel an e-mandate at any time. This can typically be done through your bank's online banking platform, mobile app, or by contacting the service provider directly. Cancelling a mandate stops future automatic deductions.
The maximum limit for an e-mandate transaction in India for automated recurring payments without repeated authentication is ₹1 lakh. For transactions exceeding this amount, additional factor authentication (AFA) is typically required for each individual debit.
To update bank details linked to an e-mandate, you generally need to cancel the existing mandate and set up a new one with the updated bank account information. This process usually involves re-authorising the new mandate with your chosen bank details.
Yes, if an e-mandate transaction fails, you will generally receive a notification from your bank or the service provider. This notification can be via SMS, email, or through your banking app, informing you about the unsuccessful debit.
You can usually check the status of your active e-mandates through your bank's net banking portal or mobile banking application. Many banks provide a section where you can view and manage your registered mandates and their current status.
If there are insufficient funds in your account during an e-mandate deduction, the transaction will typically fail. Your bank may levy a penalty or a "return charge" for the failed debit, and the service provider might also impose late fees.
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