Direct Debit means a payment order issued to debit the bank account of the payer on request by the beneficiary/creditor. It is a legal contract authorized by the debtor allowing a creditor to debit an amount from the specified debtor’s account at the debtor’s bank at predefined date as per the direct debit mandate.

Direct Debit Mandate is an agreement authorized by debtor (payer) allowing a beneficiary party (beneficiary’s bank/creditor), to debit an amount from the specified debtor’s account at the debtor’s bank at predefined date fixed in the mandate. Mandate will be used for direct debit transactions in the ACH system. It can be in a pre-printed form which is physically signed by the debtor (Payers) and beneficiary. In future, CBO may introduce direct debit mandate in electronic format.

There are following two types of Direct Debit Mandates:

• i. Revocable Mandate
• ii. Irrevocable Mandate

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• i. Revocable Mandate: A direct debit mandate that has the ability to be revoked (cancelled) or altered by either party (i.e. payer or beneficiary).
• ii. Irrevocable Mandate: A direct debit mandate that cannot be revoked (cancelled) or altered without prior approval from both parties specially by the beneficiary (creditor) or beneficiary’s (creditor’s) bank.

No. Irrevocable mandates can only be cancelled (revoked) or altered with approval from the beneficiary (creditor) or beneficiary’s (creditor’s) bank.

Yes. It can be revoked or altered by either party (payer or beneficiary).

The below are the parties involved in Direct Debit transactions:

• The Creditor: receives the mandate from the Debtor to initiate payments to receive funds from the Debtor Bank by debiting the account of the Debtor.
• The Creditor Bank: is the bank where the Creditor's account is held and which has an arrangement with the Creditor to initiate the Direct Debit Transaction for collection from the Debtor Bank.
• The Debtor: gives the mandate to the Creditor to initiate payments. The Debtor’s bank account is debited in accordance with the payments initiated by the Creditor through his/her bank.
• The Debtor Bank: is the bank where the account to be debited is held, and will execute each collection of the direct debit originated by the Creditor bank, by debiting the Debtor’s account.

Mandate Management System (MMS) is the centralized system from Central Bank of Oman (CBO) providing end to end Mandate management includes mandate initiation, amendment, termination and stop mandate payment as agreed by the Debtor and Creditor customers.

Direct Debit Mandate can be initiated by both the Creditor or Debtor bank on behalf of the creditor (beneficiary) and debtor (payer) respectively. First the Pre-printed Direct Debit Mandate Form needs to be duly filled and signed by Debtor (payer) and beneficiary (or by beneficiary’s authorized representative). Then the Direct Debit Mandate will be submitted either by the creditor (beneficiary’s bank) bank or by debtor (payer) bank to the CBO’s Mandate Management System (MMS). The Direct Debit Mandate submitted in the MMS, needs to be approved by debtor (payer) bank within five (5) days. If not approved by 5 days, then the mandate will be auto rejected in the system and cannot be executed for direct debit transactions. If approved, then the direct debit transactions will be processed through CBO’s ACH system as per the transaction detail defined in the Mandate (amount, execute date, beneficiary etc.).

No. The direct debit mandate needs to be approved by debtor (payer) bank within five (5) days of the submission in MMS. If not approved within 5 days, then it will be auto rejected in the CBO’s MMS system.

Direct Debit Payment Transaction will come through CBO’s existing ACH system.

Direct Debit Payment transactions will be processed through CBO’s ACH system. In this regard, MT 104 message will come through ACH system to debtor (payer) bank for payments of direct debit transaction. Debtor bank needs to respond to the transactions within the ACH session. All the direct debit transactions will be auto approved after the cut-off (expiry) of the session unless responded by the debtor (payer) bank.

At present there is no fees/charges/penalty for the direct debit published by CBO. CBO is working on the fees and charges related to the entire payment processing system including Direct Debit. The same will be issued by CBO in due course, until then no fees related to Direct Debits will be recovered from the customers.

CBO will communicate details of the fees and charges in due course.

Once a direct debit payment is dishonored, the beneficiary (creditor) bank may resend this to payer bank 3 times for the payment. If not honoured within 3 attempts, then this direct debit payment transaction will get cancelled and a new transaction needs to be initiated.

Yes, Bank will report the direct debit related returns to CBO same as cheque return cases.

Bank will report the direct debit related returns to Mala’a system same as cheque return cases.

Bank will report the direct debit related returns to Mala’a system same as cheque return cases.

Only the amendment of beneficiary account details can be done. No other alteration can be allowed. Incase of any other amendment such as altering the amount, dates etc. the mandate needs to be canceled and a new mandate needs to be created.

Yes, Direct Debit Payment is considered as a legal instrument (like a cheque). There will be legal consequences for failed direct debit payments due to insufficient fund in payer’s account to honor the payment commitment. It may lead to imprisonment and/or financial penalty as per the National Payments Systems Law.

Direct Debit will offer advantage and flexibility for customers (both payer and beneficiary) in terms of making payment finance instalment payments, utility bill payments or any recurring payments. It will make the collection process hassle free for the banks, finance companies, utility service providers, mobile companies and other companies or organizations in terms of collection payments from clients.

Most importantly it will play an important role as a mode of retail financing facilities considering that many customers who would like to avail finance from banks, are struggling to do so as those customers have already assigned their Salary to other banks where they have an existing finance. PDC is one option where the bank can use to acquire new customers. But the cost and procedure of handling PDCs makes it a difficult proposition.

Direct Debit will add flexibility and convenience as a source of Payments of monthly EMIs for the financing products.

Yes, Post-dated cheques (PDCs) will be discontinued and replaced by Direct Debit Payments.

A plan and mechanism will be put in place in due course to convert the existing Auto finance contracts booked against PDCs to Direct Debit Mandates. A separate communication will be shared with all staff once the plan will be put in place for the replacement of existing PDCs by Direct Debit Mandates.

Post Dated Cheques (PDCs) will be stopped for any new Auto Finance. From 01^st of August, no new auto finance will be booked against PDCs. Instead of PDCs, new finance will be booked against irrevocable Direct Debit Mandates provided by the customers. New Auto Finance against Direct Debit Mandates require prior approval from the Retail Business and Risk Management.

Yes, it will increase the existing finance processing turn-around time since banks needs to wait for minimum 5 days to receive the confirmation of the Direct Debit Mandate gets approved in the CBO’s system by the Debtor (payer) bank.

Yes, the bank has to ensure that all direct debit instructions and mandates are cancelled before closing the accounts. If available, then the direct debit mandate and instruction needs to be revoked (cancelled) in the CBO’s MMS before closing the accounts. It may take up to 5 working days to cancel the Mandates (specially for irrevocable mandates). This should be added in the account closure check-list.

Direct debit transactions are configured as "auto accept" in CBO system, Hence, if a transaction is not acted upon by debtor (payer) bank within the session expiry time, by end of session time, the transaction will be auto approved.

Yes. Debtor bank can also initiate the direct debit.

Irrevocable direct debit mandate to be used for the collection of finance EMIs to make it more secured as irrevocable direct debit mandate cannot be cancelled without creditor (beneficiary) bank’s approval.

Revocable direct debit mandate can be used for the collection of utility service providers, mobile service operators etc.

It can be either Payer bank or creditor bank. The bank that is receiving the original form will be the custodian (either payer bank or creditor Bank).

Yes, daily transactions report and from ACH system will show the approved & rejected payments /requests for direct payments.

Usually the creditor (beneficiary) bank initiates the mandate signing and approval process, however the Direct Debit Mandate (MMS) system provides option for even the debtor (payer) bank to initiate such process.

Yes, the creditor bank receives the message sent from the debtor bank about the revocation (cancellation) of the revocable mandate.

It needs to be agreed between the debtor (payer) and creditor (beneficiary) banks for the revocation (cancellation) of irrevocable mandate. Then it will be updated in the CBO’s MMS system by the concerned participant bank.

Yes, for revocable mandate – it can be done by either of the banks (debtor or creditor bank). For irrevocable mandate it needs to be raised by the payer through payer bank and accepted by the beneficiary and his/her bank.

If the mandate is already cancelled, then the CBO ACH system will reject the subsequent direct debit payment transactions.

As per the direct debit transaction limit set by CBO. CBO will communicate the limit to the participating banks.

CBO will share the fees and charges related to direct debit (outward and inward direct debit in terms of acceptance, rejection etc.) in due course.

Yes, customer’s all financial exposures including direct debit will be considered for DBR calculation. The direct debit will also be reported and included in Mala’a report.

DBR (Debt Burdon Ratio) is calculated by the bank when sanctioning the finance to customer. Direct debit is one of the mechanisms to collect the monthly EMI of the finance disbursed by the bank. There are other methods like account debit, PDCs etc. that are currently used by banks for EMI collections. The introduction of Direct Debit does not replace any of the existing finance processing, sanctioning steps or any reporting requirements. Instead of taking the PDC for the EMI collection, bank will use direct debit for the EMI collection.

Instead of taking the monthly Post Dated Cheques (PDCs) for the finance EMI collection, bank will take one direct debit mandate covering the entire EMI collection.

NOC can be obtained from the beneficiary either in letter form or through e-consent subject to bank’s system configuration and internal policy.

In order to stop the mandate requires 5 days period for effecting the revocation. If the mandate is revocable, the stop mandate may be submitted by the debitor to his banker and the same should be uploaded in the MMS. The ACH system will not accept any transactions after this stop mandate is activated. In case of irrevocable mandate, the uploaded stop mandate should be accepted by the beneficiary bank and customer, within 5 days of uploading in the MMS.

Stop payment of a direct debit transaction is same as the stop payment of the cheque. A customer can stop the ACH payment transaction at any time before the cutoff time for return of the transaction. However, once the transaction is posted in the accounts of the debitor, it cannot be stopped.

Yes, same as existing record retention period of ten (10) years. Direct debit mandate need to be kept for 10 years by the mandate receiving bank.

The direct debit mandate can be set and direct debit payment can be debited from any active account (it can be current or savings account) maintained by the payer with the debtor bank as per the account details mentioned in the direct debit mandate.

Yes, transaction alert (via sms/email) will be available for each direct debit transaction and will be received by the payer and beneficiary from their respective banks.

Direct Debit Mandate has both options i.e. specifying a fixed amount or specifying a ceiling (range) amount. If the debtor (payer) selects ceiling option and mention the ceiling range amount, then the payment will be made for the amount within the defined ceiling.

Only the maximum amount to be mentioned on the Mandate form.

Debtor (payer) to mention the payee account in the direct debit mandate. Direct debit payments will be recovered from that specified account.

The bank providing the direct debit payment (debtor bank) must keep the original direct debit authorization form for a period of (10) ten years.

Currently, this feature is not available and may be considered in future.

Creditor (beneficiary) bank to follow usual form it’s verification of genuineness' of the direct debit request.

Authorized signatories according to the account mandate (mode of operations i.e. single or multiple authorized signatories).

Omani Rial only.

Direct debit payment can only be collected from payer’s bank account.

Only Creditor (beneficiary) account details will be allowed to be amended.

If the bank fails to act on the mandate within 5 days from the submission day it will be considered as Non complaisance to the CBO ACH system operating rules.

Yes, the same daily cutover time of ACH is applicable.

CBO will share all the fees and charges related to direct debit mandate and payments in due course. Once shared by CBO, the charges will be reviewed and endorsed by the Bank’s Shari’a Department. Till such time there will be no charges applied by the bank.

Yes, the bank will inform the status of the direct debit after the setup.

Revocable direct debit mandate can be cancelled by any party. For irrevocable direct debit mandate, approval/acceptance is required from creditor (beneficiary) to cancel it.

Customer can initiate the cancellation request manually or in future bank may provide electronic form to initiate the cancellation request. Revocable direct debit mandate can be cancelled by any party. For irrevocable direct debit mandate, approval/acceptance is required from creditor (beneficiary) to cancel it.

Revocable direct debit mandate can be cancelled by any party any time. For irrevocable direct debit mandate, approval/acceptance is required from creditor (beneficiary) to cancel it. It will take 5 days to receive the approval from the creditor (beneficiary) for the cancellation of the Mandate.

If I initiate the direct debit request through my bank, then I can contact with my bank to check the status of the direct debit setup.

Yes, there will be standard reference number (as per sequence provided by CBO) available on the pre-printed Direct Debit Mandate Form.

I can identify through the Transaction alerts that will be sent by the respective banks (debtor or creditor) for the direct debit transactions and through my account statement.

It cannot be amended. The mandate needs to be cancelled and a new mandate needs to be issued.

For revocable mandate I can cancel it through my (payer) bank. If it is irrevocable mandate, approval/acceptance is required from the creditor/creditor (beneficiary) bank.

All existing finance under PDCs to be converted to Direct Debit payments. Bank will put in place a plan and mechanism to convert the existing PDCs to Direct Debits.

Yes. Both account holder’s signature is required on the Mandate as payers.

CBO is currently working on the charges and will share all the charges including the direct debit return charge due to insufficient fund.

I can call to call center or customer experience team to raise compliant related to direct debit same like I can do for other banking products and services.

The direct debit Mandate form will be available with the initiator bank and the mandate will be available in the CBO’s Mandate Management System for the acceptance of the payer bank. The direct debit payment transaction will happen through the same ACH system which is fully secured system from CBO used for clearing.

The creditor (beneficiary) bank can send the transaction maximum for 3 times (attempts) to honour the direct debit payment. After the failure in 3rd attempt, the transaction will be cancelled and a new transaction needs to be initiated.

Refusing to pay or dishonouring direct debit payment due to insufficient funds by the payer is a punishable offence under National Payments Services Law. It can have consequences of both imprisonments and/or financial penalties according to the law.