RBI's new initiative to prevent incorrect RTGS and NEFT fund transfers - Money News

Here’s some good news for you: transferring money to the wrong bank account could soon be a thing of the past! The Reserve Bank of India (RBI) has announced a new initiative to introduce a beneficiary account name search tool for Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems.

This feature will allow users to verify the beneficiary name before finalizing a transaction. It aims to significantly reduce the number of incorrect or fraudulent transfers.

A welcome change

Currently, the Unified Payments Interface (UPI) and Immediate Payment Service (IMPS) systems already offer this functionality. They allow users to confirm the recipient’s name before making payments. On December 30, RBI said, “Currently, the Unified Payments Interface (UPI) and Immediate Payment Service (IMPS) systems allow a sender to verify the name of the beneficiary before initiating the transfer. »

Now RTGS and NEFT users will also get the same benefit.

Adhil Shetty, CEO, Bankbazaar.com, said, “The beneficiary account name search feature will be a game changer for customers using RTGS and NEFT. RBI has done a remarkable job in introducing this initiative. It allows money transmitters to confirm the name of the account holder before transferring money. This simple step will help avoid errors caused by incorrect account details. This will also serve as a safeguard against fraudulent transactions. Customers can check the beneficiary name based on the account number and IFSC entered. If the name cannot be displayed, they can decide whether or not to proceed with the transfer.

“By making this functionality available through online banking, mobile banking and even in branches, banks will ensure a uniform and seamless experience for all users. This initiative strengthens digital banking and makes it safer and more reliable for customers,” says Shetty.

How it works

The National Payments Company India (NPCI) was tasked with developing this new facility. Banks will integrate it into their online banking and mobile banking platforms. It will also be accessible to customers carrying out transactions at bank branches.

While using RTGS or NEFT, customers will enter the beneficiary’s account number and IFSC code of the branch. The system will then display the recipient’s name, allowing the sender to confirm the details before continuing.

This simple but effective step will avoid errors caused by incorrect account numbers or IFSC codes.

Deadline for banks

The RBI has directed banks to implement this system by April 1, 2025. This includes all direct and sub-member banks of the RTGS and NEFT systems.

Monetary policy announcement

The initiative stems from the Monetary Policy Committee meeting held on October 9, 2024. During the meeting, RBI Governor Shaktikanta Das highlighted the importance of this facility.

“There have been requests to introduce such functionality for RTGS and NEFT systems. Accordingly, to enable RTGS and NEFT fund senders to verify the name of the beneficiary account holder before initiating the fund transfer, it is now proposed to introduce a “Beneficiary Account Name Search Facility”, a- he announced.

Benefits for users

This installation should have multiple advantages. It will be:

Reduce incorrect transfers.
Minimize cases of fraud.
Increase customer trust in digital banking systems.

By April 2025, the days of worrying about bad transfers could be over. As NPCI grows and banks adopt this feature, digital banking is set to become safer and more convenient for everyone in India.