The Reserve Bank of India (RBI) is planning to introduce a new feature for Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems, allowing users to verify the recipient’s name before initiating payments. This facility, already available for Unified Payments Interface (UPI) and Immediate Payment Service (IMPS) transfers, is aimed at reducing the risk of transferring money to the wrong account. The initiative was announced by RBI Governor Shaktikanta Das during the RBI’s Monetary Policy Committee meeting on October 9, 2024.

Key Details of the New Facility

The new “beneficiary account name look-up” feature will allow remitters to check the name of the account holder before confirming a payment. By entering the beneficiary’s account number and the IFSC code of the branch, the remitter can view the recipient’s name, helping to prevent errors and minimize the chance of fraud. The RBI will issue detailed guidelines for this feature soon.

This facility has already been a part of UPI and IMPS, where users can verify the beneficiary’s name before executing a payment. Now, the RBI intends to implement the same feature for RTGS and NEFT systems, further enhancing payment security.

Benefits of the New Feature

With this new name verification feature, customers can feel more confident in making secure transactions. The risk of mistakenly sending money to the wrong account will be significantly reduced, helping to avoid financial losses and fraudulent transfers. This feature will also enhance trust among both individual users and businesses in digital payment systems.

Amit Relan, Co-Founder and CEO of mFilterIt commented, “This move by the RBI to enable name verification for RTGS and NEFT is a major step forward in improving payment security. It will not only reduce fraud but also ensure smoother transaction experiences for consumers and businesses alike.”

Understanding RTGS, NEFT, IMPS

IMPS (Immediate Payment Service) 

IMPS is a popular payment system used for transferring funds via mobile banking or online banking. It allows users to send money instantly by using either the beneficiary’s mobile number and MMID (Mobile Money Identifier) or their account number and IFSC code.

Steps to send money using IMPS:

1. Log in to your bank’s mobile or online banking platform.
2. Choose IMPS under “Funds Transfer.”
3. Enter the beneficiary’s mobile number MMID or account number and IFSC code.
4. Input the amount to be transferred and your MPIN.
5. Review the details and confirm the transfer.

RTGS (Real-Time Gross Settlement)

RTGS is another widely used payment system in India, designed for high-value transactions. RTGS allows the transfer of funds in real-time and on a gross basis, meaning the transaction is settled immediately without delay.

Steps to send money using RTGS:

1. Log in to your bank’s net banking or mobile banking app.
2. Select RTGS from the fund transfer options.
3. Add the beneficiary by entering their account details and the bank’s IFSC code.
4. Enter the amount to be transferred.
5. Review all the details carefully before confirming the transaction.
6. Authenticate the payment using OTP, then submit it.

Why This Matters

With the increasing use of digital payments, ensuring the accuracy of fund transfers has become critical. Mistakes in transferring money to incorrect accounts can lead to significant challenges for both individuals and businesses. The introduction of a name verification feature for RTGS and NEFT will not only prevent such errors but also enhance overall confidence in India’s digital banking systems.

This development comes at a time when India’s digital economy is rapidly expanding, and secure, reliable payment systems are crucial to supporting this growth.

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