The Reserve Bank of India (RBI) has introduced a new beneficiary bank account name look-up facility for the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems, aimed at enhancing the security and accuracy of digital transactions. This move is designed to help remitters verify the name of the beneficiary before initiating transfers, reducing the risk of errors and fraud. Here’s everything you need to know about the new feature and its benefits.

What is the new facility introduced by the Reserve Bank of India (RBI)?

The RBI has introduced a beneficiary bank account name look-up facility for the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. This facility will allow remitters to verify the beneficiary’s bank account name before initiating a transaction, reducing the risks of errors and fraud.

Why is this facility being introduced?

The facility aims to enhance transaction accuracy and improve security by ensuring that the name provided by the sender matches the account details of the beneficiary. It will reduce the chances of incorrect account transfers and help prevent fraudulent transactions.

When will this facility be available?

The facility must be rolled out by April 1, 2025, as per the RBI’s directive.

Which systems will be affected by this change?

The new feature will be applicable to the RTGS and NEFT systems, both of which are used for real-time bank transfers across India.

How will customers access the new feature?

The look-up facility will be available through Internet banking and mobile banking platforms. Additionally, customers visiting bank branches for transactions can also use the facility to verify the beneficiary’s account details.

Is there any charge for using this facility?

No, the RBI has mandated that the beneficiary name look-up facility will be available to customers free of charge.

How will the facility work?

Customers will enter the beneficiary’s account number and IFSC code. The system will then fetch the beneficiary’s account name from the bank’s Core Banking Solution (CBS). If the name cannot be fetched for any reason, the remitter can still proceed with the transaction at their discretion.

What will happen if the beneficiary’s name cannot be displayed?

If the beneficiary’s name cannot be retrieved, the remitter can choose to proceed with the transaction based on their own judgment. However, the feature aims to reduce such instances by ensuring verification beforehand.

How will this impact the prevention of fraud?

This system will help prevent fraud by enabling real-time verification of beneficiary account names before completing transactions, similar to the existing functionality in systems like UPI and IMPS.

What other benefits does this facility offer?

Enhanced transaction accuracy: Ensures that the remitter can verify the recipient’s account name, reducing errors from incorrect account details.

Improved security: Minimises the risk of fraudulent transactions or incorrect transfers.

Streamlined process: Adds an additional layer of assurance in transactions, making digital banking more reliable for users.

How does this move align with RBI’s broader goals?

This move is part of RBI’s ongoing efforts to improve the digital payment ecosystem in India. With increasing reliance on online banking, the initiative will foster trust in digital systems, encouraging secure and efficient payment methods.

What did the Delhi High Court say about this initiative?

The Delhi High Court directed the RBI to swiftly implement the beneficiary name verification system for RTGS and NEFT transactions, stressing its importance in preventing cyber fraud. The court ordered that the system be rolled out across all banks to protect consumers from sending payments to fraudulent beneficiaries.