RBI changes regulatory framework for domestic money transfer services

-, Jul 25, 2024, India Blooms News Service

Mumbai: The Reserve Bank of India (RBI) has updated the regulatory framework for domestic money transfer services, tightening Know Your Customer (KYC) requirements for regulated entities.

This revision follows a recent review of payment transfer services.

The new rules require remitting banks to collect and retain the name and address of beneficiaries for cash payouts, as communicated by the RBI to authorized payment system operators.

Each transaction by a remitter must now include an additional factor of authentication (AFA).

Initially introduced in 2021, the regulations aimed at the domestic money transfer segment have been updated to reflect the growth in banking outlets, advancements in payment systems, and easier KYC compliance.

With numerous digital fund transfer options available, the RBI mandates that remitting banks and business correspondents (BCs) register remitters using a verified cell phone number and a self-certified officially valid document (OVD).

Furthermore, remitting banks must include remitter details in the IMPS/NEFT transaction messages, and these messages should clearly identify cash-based remittances.

Remitting banks and BCs must adhere to the provisions of the Income Tax Act, 1961, and related rules regarding cash deposits.