IANS | 24 Jul, 2024
The Reserve Bank of India (RBI) has tightened the framework for domestic
money transfers in order to keep track of both cash pay-in and pay-out
services.
In a circular issued on Wednesday, the RBI stated that in the case of
cash pay-out service, the remitting bank shall obtain and keep a record of the
name and address of the beneficiary.
The circular also mentioned that in the case of cash pay-in service, the
remitting banks or business correspondents shall register the remitter based on
a verified cell phone number and a self-certified 'Officially Valid Document
(OVD)' as per the Master Direction – Know Your Customer Direction 2016, as
amended from time to time.
Every transaction by a remitter will also have to be validated by an
Additional Factor of Authentication (AFA).
"Remitting banks and their business correspondents shall conform to
provisions of the Income Tax Act, 1961 and the rules/ regulations framed
thereunder (as amended from time to time), pertaining to cash deposits,"
the circular states.
The remitter bank shall include remitter details as part of the
IMPS/NEFT transaction message, it added.
The transaction message will have to include an identifier to identify
the fund transfer as a cash-based remittance.
The RBI also stated that the guidelines on card-to-card transfers are
excluded from the purview of the DMT framework and shall be governed under the
guidelines granted for such instruments.
The RBI explained that since the framework for Domestic Money Transfer
(DMT) was introduced in 2011, there has been significant increase in the
availability of banking outlets, developments in payment systems for funds
transfers, and ease in fulfilling KYC requirements, etc. Now, users have
multiple digital options for fund transfer.
The RBI said that the changes are being introduced following a review
that was undertaken recently of various services facilitated in the current
framework.