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The Reserve Bank of India (RBI) on Wednesday announced a new feature that will help people double-check the name of the person they're sending money to before completing a transfer. This is similar to what you can already do with UPI and IMPS transfers and will help in reducing instances of incorrect fund transfers.
This move aims to mitigate the risk of cybercrime by allowing individuals to double-check the recipient's identity, reducing the chances of errors or fraudulent transactions.
The announcement was made by the RBI governor, Shaktikanta Das, during the Monetary Policy Committee meeting on October 9, 2024.
NEFT (National Electronic Funds Transfer) and RTGS (Real-Time Gross Settlement) are two methods of transferring money electronically in India.RTGS is faster, providing instant transfers, while NEFT operates in batches and may take longer.
NEFT has no minimum limit, while RTGS has a minimum limit of Rs 2 lakh.
NEFT is often used for smaller transactions, while RTGS is preferred for larger amounts that need immediate settlement.
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Why this is important?
Currently, when you use RTGS or NEFT to transfer money, you can accidentally send money to the wrong person if you mistype something. This new feature aims to cut down on those mistakes.
How does it work?
When you want to send money, you’ll enter the recipient's bank account number and the IFSC code (which identifies their bank branch). The system will then show you the name of the person who holds that account. This way, you can confirm that you're sending money to the right person before finalizing the transfer.
“Introduction of beneficiary account name look-up facility: Payment Systems like UPI and IMPS provide a facility to the remitter to verify the name of the receiver (beneficiary) before initiating a payment transaction. There have been requests to introduce such a facility for Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) systems. Accordingly, to enable remitters in RTGS and NEFT to verify the name of the beneficiary account holder before initiating funds it is now proposed to introduce a ‘beneficiary account name look-up facility’," the RBI governor said in a statement.
This will make people feel more secure about their transactions and help reduce fraud and mistakes.
Detailed guidelines will be issued separately,” stated the Statement on Developmental and Regulatory Policies released on October 9, 2024.
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