The Reserve Bank of India (RBI) has tightened the rules related to cash pay-out service at banks and has asked them to obtain KYC details of remitters and beneficiaries.
“There has been significant increase in the availability of banking outlets, developments in payment systems for funds transfers, and ease in fulfilling KYC requirements etc., since then; and now users have multiple digital options for funds transfer. A review was recently undertaken of various services facilitated in the current framework,” RBI said in a notification.
Based on the review, the apex bank has said that remitting banks are now required to record the name and address of the beneficiary for cash pay-out services.
For cash pay-in services, remitting banks and Business Correspondents (BCs) must register remitters using verified cell phone numbers and self-certified Officially Valid Documents (OVDs) as per the KYC direction 2016. Additionally, every remittance transaction will require an Additional Factor of Authentication (AFA) for validation.
Furthermore, compliance with Income Tax Act regulations on cash deposits is mandated, and remitter details must be included in IMPS/NEFT transaction messages, with a specific identifier for cash-based transfers.
RBI further informed that the guidelines on Card-to-Card transfer are excluded from the purview of the DMT framework and shall be governed under the guidelines / approvals granted for such instruments. Notably, the Domestic Money Transfer (DMT) framework was initially introduced by RBI in 2011.
“All other instructions in the above circular dated October 5, 2011 including the limits in size of transactions shall continue to be applicable,” the bank stated.
The changes made to the framework are issued under Section 18 read with Section 10 (2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and will come into effect from November 01, 2024.
