RBI guidelines for recurring transactions

As per the latest guidelines issued by the Reserve Bank of India (RBI), Banks are mandated to send their card holders a pre-debit notification 24 hours prior the due date for the bank to process the auto-debit transaction on the debit/credit cards.

Further, if the auto debit is for an amount exceeding Rs. 5,000/-, the respective debit/credit card holders will have to approve the transaction via an OTP for additional authentication.

Points to remember:

  • To register for auto debit transactions, the card holders need to validate the registration by entering the OTP, basis which the bank generates mandate ID. In the absence of the mandate ID, payments cannot be processed hence it is important to follow this step. For recurring payments exceeding Rs. 5,000/-, the customer needs to authorize the transaction via OTP, post which the payment gets approved. The Bank will send communication with reference to the same.
  • For recurring payment less than Rs. 5,000/-, the premium amount will be auto debited from customer’s account without any OTP post authorization of the debit mandate by the Bank. . The Bank will send communication with reference to the same. We urge customers not to de-register the auto debit mandate as the next premium instalment will not be deducted.

1.Premium Payment Option

If the Insured Person has opted for payment of Premium on an instalment basis i.e. Yearly, Half Yearly, Quarterly or Monthly, as mentioned in the Policy Schedule, the following Conditions shall apply (notwithstanding any terms contrary elsewhere in the Policy):


  • Grace Period would be provided for payment of instalment premium as per the table below:
    Options Instalment Premium Option Grace Period applicable
    Option 1  Yearly 30 days
    Option 2Half Yearly 30 days
    Option 3Quarterly 30 days
    Option 4Monthly 15 days
  • During such Grace Period, coverage will not be available from the due date of instalment premium till the date of receipt of premium by the Company
  • The Insured Person will get the accrued continuity benefit in respect of the “Waiting Periods”, “Specific Waiting Periods” in the event of payment of premium within the stipulated grace period
  • No interest will be charged If the instalment premium is not paid on due date
  • In case of instalment premium not received within the Grace Period, the Policy will get cancelled
  • In the event of a claim within the policy period for which premium has been paid, all subsequent premium instalments shall immediately become due and payable
  • The Company has the right to recover and deduct all the pending instalments from the claim amount due under the policy.

2. Free Look period

The Free Look Period shall be applicable on new individual health insurance policies and not on renewals or at the time of porting/migrating the policy.

The insured person shall be allowed free look period of fifteen days from date of receipt of the policy document to review the terms and conditions of the policy, and to return the same if not acceptable.

If the insured has not made any claim during the Free Look Period, the insured shall be entitled to:


  • a refund of the premium paid less any expenses incurred by the Company on medical examination of the insured person/sand the stamp duty charges OR
  • where the risk has already commenced and the option of return of the policy is exercised by the insured person, a deduction towards the proportionate risk premium for period of cover OR
  • Where only a part of the insurance coverage has commenced, such proportionate premium commensurate with the insurance coverage during such period.

3. Cancellation (Other than free look Period)

  • The Policyholder may cancel this Policy by giving 15days’ written notice and in such an event, the Company shall refund to the Insured a pro-rata premium for the unexpired Policy Period.
    Note: For Policies where premium is paid by instalment: In case of admissible claim under the Policy, future instalment for the current Policy Year will be recovered in the claim amount and no refund of any premium will be applicable during the Policy Year
  • The Company may cancel the Policy at any time on grounds of misrepresentation non-disclosure of material facts, fraud by the Insured Person by giving 15 days’ written notice. There would be no refund of premium on cancellation on grounds of misrepresentation, non-disclosure of material facts or fraud.
  • Refund of Policy premium in case of death of Insured Person/s: Policy premium shall be refunded proportionately for the deceased Insured Person, for the unexpired Policy Period in case of death of any Insured Person/s
  • Notwithstanding anything contained herein or otherwise, no refunds of premium shall be made in respect of Cancellation where any claim has been admitted or any benefit has been availed by the Insured Person under the Policy.