New Bank Money Transfer Rules Starting November 1, 2024: What You Need to Know

The Reserve Bank of India (RBI) has announced new rules for Domestic Money Transfer (DMT) that will take effect on November 1, 2024. These rules aim to make Know Your Customer (KYC) requirements stricter and improve banking services and payment systems.

The RBI’s circular from July 24, 2024, highlighted the increase in banking outlets, improvements in payment systems, and easier KYC processes. With more digital options for money transfers, the updated rules ensure compliance with financial laws and enhance the security of domestic money transfers.

Key Changes from November 1, 2024:

Cash Pay-out Service:

• The remitting bank must record the name and address of the beneficiary.

Cash Pay-in Service:

• Verify the remitter’s cell phone number and documents.
• Remitting banks or Business Correspondents (BCs) will register the remitter using a verified mobile phone number and a self-certified ‘Officially Valid Document (OVD)’ as per the Master Direction – Know Your Customer Direction 2016.
• Every transaction will need an Additional Factor of Authentication (AFA).

Income Tax Act, 1961:

• Remitting banks and BCs must follow the rules of the Income Tax Act of 1961 regarding cash deposits.

Remitter Details:

• The remitter’s details must be included in the IMPS/NEFT transaction message.

Cash-based Remittance:

• The transaction message should identify the transfer as cash-based.

According to the RBI’s October 5, 2011 notification, walk-in customers at a bank branch can remit up to Rs. 50,000 to a beneficiary’s bank account through NEFT. They can also transfer funds up to Rs. 5,000 per transaction (with a monthly cap of Rs. 25,000) to a beneficiary’s account through BCs, ATMs, etc., with minimal details like name and address.

Note:

• Guidelines on Card-to-Card transfer are excluded from the DMT framework and will be governed under separate guidelines.

These new rules are designed to prevent fraud, improve customer experience, and ensure that domestic money transfers are secure and efficient.