The Reserve Bank of India (RBI) has introduced a ‘beneficiary account name look up’ facility for fund transfers via RTGS and NEFT to mitigate cases of fraud and wrong credit.
Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday announced a ‘beneficiary account name look-up facility’ for real-time gross settlement (RTGS) and national electronic fund transfer (NEFT) remitters. “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,” Das said in his statement after the fourth monetary policy meeting (MPC).
There have been requests for such a facility for some time, and RBI said it will help people verify the beneficiary’s name during high-value transactions via RTGS and NEFT.
The RTGS is a fund transfer system that happens on a real-time basis. This payment system works constantly between banks to make payments. The transaction should be a minimum of Rs 2 lakh, and there is no upper limit on the transaction amount. It is available 24 hours daily and transfers the funds in real time to the beneficiary account.
NEFT is the fund transfer facility from one account to another. Here, the settlement is the same as in RTGS, and like in RTGS, users need to have the details, such as name, account number, IFSC code, bank name, and the branch name of the beneficiary. The only difference between NEFT and RTGS is that NEFT is for transactions up to Rs 2 lakh, and its settlement takes around 30 minutes instead of real-time.
Das said, “To enable remitters in RTGS and NEFT to verify the name of the beneficiary account holder before initiating funds transfer, it is now proposed to introduce a ‘beneficiary account name look-up facility’. Remitters can input the account number and the beneficiary’s branch IFSC code, after which the beneficiary’s name will be displayed. This facility will increase customer confidence and reduce the possibility of fraudulent credit and fraud. Detailed guidelines will be issued separately.”
Through this facility, the remitter can verify the beneficiary’s name and be sure that the money is transferred to the valid account and beneficiary before the transaction is processed. It will reduce the cases where the amount was transferred to the wrong or invalid account.