RBI Rule: The Reserve Bank of India (RBI) has announced a new campaign aimed at tackling online money transfer irregularities. From April 1, 2025, a new system will be implemented that allows customers to verify their bank account name before transferring money through Real-Time Gross Settlement (RTGS) and National Fund Transfer (NEFT) systems. The move is expected to reduce errors and prevent fraudulent transactions, according to an RBI circular.
Important Information About the New System
To improve security in online money transfers, the RBI has directed the National Payments Corporation of India (NPCI) to improve the authentication environment. This facility will allow users to verify the beneficiary’s account name before initiating the transfer using RTGS or NEFT.
Currently, such verification option is available for payments made through Unified Payments Interface (UPI) and Instant Payment Service (IMPS). The new RBI rule will extend this feature to RTGS and NEFT, giving users an extra layer of security.
RBI Mandate for Banks
In a circular issued on Monday, the RBI stated that all banks participating in the RTGS and NEFT systems must provide this verification service by April 1, 2025. This will be accessible through internet banking, mobile banking, and even to customers visiting bank branches for complete transactions. .
The facility is designed to verify the name of the beneficiary’s bank account before the sender proceeds with the transfer. It will help reduce errors and protect against fraud for customers using these payment methods.
Benefits of the New Facility
This new system will allow the sender to check the beneficiary’s bank account name before starting the transaction. The name will be returned to the Core Banking Solution (CBS) of the beneficiary bank based on the account number and IFSC code provided by the sender.
If the beneficiary’s name is successfully received, it will be displayed to the sender. In cases where the name cannot be returned, the sender will have the option to continue the work at his discretion, the circular said.
Focus on Reducing Fraud
The main objective of this initiative is to reduce irregularities and fraudulent activities associated with RTGS and NEFT. By ensuring that the sender can verify the name of the beneficiary’s account in advance, the RBI hopes to prevent incidents of erroneous or fraudulent transfers.
No New Facility Fees
RBI has emphasized that customers will not be charged any fees for using the beneficiary account name verification service. The facility will be free for all users, and any disputes that arise will be resolved between the issuing bank and the beneficiary bank. Both the institutions will check the reference number of the reference and the logs to resolve any issues, RBI said.
According to PTI