The Reserve Bank of India (RBI) has taken a major step with the aim of making online fund transfers secure and accurate. RBI has informed that by April 1, 2025, all banks using National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) system will provide the facility to customers to verify the name of the beneficiary’s account. This step has been taken to prevent errors and fraud in fund transfer.
What will be the benefit?
Importantly, the beneficiary name verification feature is already available in payment systems like Unified Payment Interface (UPI) and Immediate Payment Service (IMPS). Now this facility will be implemented for NEFT and RTGS. This process will be done through the Bank’s Core Banking Solution (CBS), which will reduce the risk of funds going to wrong accounts and prevent fraud cases.
How will this feature work?
As per RBI, the name of the account holder will be obtained from the CBS of the beneficiary bank based on the beneficiary’s account number and IFSC code entered by the remitter. This name will be shown to the person transferring the money, so that he can confirm that the information given is correct. If due to some technical reason the account name is not displayed, the depositor can decide the amount to be withdrawn.
Will there be any freebies for customers?
- RBI has clarified that this service will be provided free of cost to the customers. Besides, this facility will also be made available through internet banking, mobile banking and branches.
- National Payments Corporation of India (NPCI) will not store any information related to this facility keeping in mind the privacy of the customers.
- RBI has also ensured that in the event of a dispute, the remitter bank and the beneficiary bank will resolve the dispute using the unique lookup reference number and the associated log.
- This step by RBI is an important initiative towards making the digital payment system more secure and user-friendly.
- This will reduce the chances of errors in fund transfer and will also increase customer confidence.
- Banks and payment system operators will now have to ensure that they implement this new facility in time.
