Mumbai: The Reserve Bank of India (RBI) has instructed banks to introduce a facility allowing customers to verify the account name of beneficiaries before transferring funds through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. The initiative aims to minimize errors and reduce fraud risks in online transactions.
Facility to Curb Errors and Prevent Fraud
Currently, systems like Unified Payments Interface (UPI) and Immediate Payments Service (IMPS) provide account name verification to users before initiating transactions. RBI’s latest directive seeks to extend similar functionality to RTGS and NEFT systems, ensuring greater transparency and security.
In a circular issued on Monday, RBI mandated the National Payments Corporation of India (NPCI) to develop the technology required for this feature. Banks that participate in RTGS and NEFT systems must implement the facility no later than April 1, 2025.
Accessible Across Banking Platforms
The account name verification feature will be available to customers via internet banking, mobile banking, and even at bank branches for in-person transactions. According to RBI, the solution will fetch the beneficiary’s account name based on the account number and IFSC code entered by the remitter. The account name will then be displayed to the remitter before the transaction is processed.
In cases where the beneficiary name cannot be displayed, customers will retain the discretion to proceed with the transaction. Importantly, RBI has emphasized that this feature must be offered to customers free of charge.
Implementation Timeline
All banks that are either direct members or sub-members of the RTGS and NEFT systems are required to comply with this directive by April 1, 2025. The facility is expected to enhance the reliability of digital transactions and streamline fund transfers across the banking system.
This measure is part of RBI’s broader efforts to strengthen the security and user experience of digital payment systems in India.
