RBI revamps regulatory framework for domestic money transfer services

The changes in the current framework have been made based on recent review of various services for payments transfer

Reserve Bank of India has revised the regulatory framework for domestic money transfer services by regulated entities by making Know Your Customer (KYC) record requirements stringent.

The changes in the current framework have been made based on a recent review of various services for payments transfer.

The remitting bank should obtain and keep a record of the name and address of the beneficiary for cash payout, RBI said in a communication to authorised payment system operators.

Every transaction by a remitter should be validated by an additional factor of authentication (AFA).

The rules to regulate the domestic money transfer segment were introduced in 2021. Since then, there has been a significant increase in the availability of banking outlets, developments in payment systems, and ease in fulfilling KYC requirements. Now users have multiple digital options for funds transfer, the regulator said.

The remitting banks/business correspondents (BCs) shall register the remitter based on a verified cell phone number and a self-certified ‘officially valid document’ (OVD), RBI said.

The bank which is remitting funds will have to include remitter details as part of the IMPS/NEFT transaction message. The transaction messages should include an identifier to identify the fund transfer as a cash-based remittance, it added.

The remitting banks and BCs have to conform to provisions of the Income Tax Act, 1961, and the related rules and regulations pertaining to cash deposits.