RBI's New Money Transfer Rules: Key Changes for Safer Transactions from November 1

The Indian central bank, the Reserve Bank of India (RBI) has introduced changes to the Domestic Money Transfer (DMT) norms from the next fiscal starting November 1, 2024. Most of these, this new set of rules is intended to improve security, facilitate verification procedures as well as make domestic money transfers safer for all. As the percentage of cashless and digital transactions increases in India these changes enhance the regulatory framework for banking and payment systems.

New Money Transfer Rules: Prime Points To Note

Below are the key points regarding the money transfer rules:-

Enhanced KYC Standards

• Beneficiary details such as their names and addresses have to be collected and maintained by banks for all cash transfers to enhance the relationship between the transfer and the beneficiary.

• This takes about 1-2 working days to complete as the verification of the remitter details submitted by the customer through their account information is done.

Verifying The Remitter Details

• To ensure that a remitter’s mobile number is not fake, both the banks and the Business Correspondents (BCs) have to ensure that they verify the documentation that is produced by the remitter.

Mandatory Registration For Remitters

• Remitters in this country are required to register with the AFAS simply because they are remitters who transact through cash pay-in services and must provide a valid phone number for registration and an OVD according to RBI’s KYC norms.

Secondary Authentication for Transaction

• AFA means that every transaction from the remitter side will provide another layer of security in the form of an additional factor of authentication.

Compliance With The Income Tax Rules

• Regarding the cash deposit, both the remitting banks and BC must follow the rule provided in the Income Tax Act.

Clear Transaction Messaging

• Transaction messages of remitter banks using IMPS, NEFT, and other methods must contain the remitter’s details. This means that cash-based transactions will now give rise to certain markers, which will facilitate their tracking.

Updated Cash Pay-out Limits

• As for transfers with cash pay-out, the cap has been increased from ₹1,500 to ₹10,000 per transaction and ₹10,000 in a month.

Impact on Customers

Identity Verification Enhancement

• It has been mandatory for the banks and BCs to capture the remitter’s Aadhaar number along with a mobile number, to undertake self-attested OVD. This requirement only applies to cash pay-in services.

Special provision for electronic money transfers from or to a payment card

• This means that card-to-card transfers do not come under the new guidelines and they will be conducted as they used to.

Cash Pay-Out Services

Cash payout service enables the customer to transact cash disbursal to a third party who does not have an account with a bank. This facility was launched in the year 2011 and enabled remitters to transfer balances to cash amounts to non-account holders through ATM or BC. New rules mean that a 10,000 Rs limit has been set on the number of transactions per transaction while the limit of 25,000 Rs per month sticks.

Conclusion

New guidelines for money transfer from RBI which is effective since 01.11.2024 envisage the improved protection of transactions under digital money and cash. By increasing KYC standards and integrating more authentication steps, the RBI aims to make banking more secure, clear and convenient for users.

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