The Auto Payment Agreement is essential for businesses operating in India that offer services requiring recurring payments or subscription-based models. This document is designed to comply with Indian banking regulations, particularly the Payment and Settlement Systems Act 2007 and RBI guidelines on recurring payments. It becomes necessary when establishing automated payment arrangements between service providers and customers, ensuring proper authorization for regular debits from customer accounts. The agreement includes crucial details such as payment schedules, maximum amount limits, modification procedures, and cancellation rights, while incorporating mandatory security measures and customer protection provisions required by Indian law. It's particularly relevant in the current digital payment landscape where automated transactions are becoming increasingly common across various sectors.

1. Parties: Identification of the parties entering into the agreement - the payment initiator (customer) and the payment recipient (service provider/merchant)

2. Background: Context of the agreement and the relationship between the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. Payment Authorization: Clear authorization from the customer for automatic debits, including payment amount, frequency, and duration

5. Payment Details: Specific details about the payment arrangement, including bank account information, maximum amount limits, and payment schedule

6. Customer Obligations: Customer's responsibilities including maintaining sufficient funds and valid account details

7. Service Provider Obligations: Service provider's responsibilities regarding payment processing, notifications, and service delivery

8. Modification and Cancellation: Procedures for modifying or cancelling the auto payment arrangement

9. Security and Confidentiality: Measures for protecting payment information and maintaining data security

10. Term and Termination: Duration of the agreement and conditions for termination

11. Governing Law and Jurisdiction: Applicable laws and jurisdiction for dispute resolution