NEFT and RTGS Transactions to Include Name Verification Feature by April 2025
The Reserve Bank of India (RBI) has recently made it mandatory for all banks providing Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities to include beneficiary account name verification options. This facility will minimize transaction errors and check fraud. This will be implemented for Internet banking, Mobile banking, and Branch banking before April 1, 2025.
Initiative to Enhance Transaction Security
The RBI revealed the initiative through a circular that stated such a service could improve the security and efficiency of fund transfer services. The new method will enable the users to verify the recipient’s bank account name before transacting.
The verification process will rely on the recipient’s account number and the Indian Financial System Code (IFSC) provided by the remitter. The system will fetch the beneficiary’s name directly from the recipient bank’s Core Banking Solution (CBS) and display it to the sender. If, for any reason, the name cannot be retrieved, the sender may choose to proceed with the transaction at their choice.
No Additional Charges for the Facility
The RBI pointed out that this service had to be delivered to customers at no cost. To facilitate the process’s efficiency, the NPCI has been responsible for creating the necessary infrastructure and linking all the concerned banks that operate within the RTGS and NEFT networks.
Unlike the UPI and IMPS, these payment transfers offer similar name verification facilities. Therefore, this change makes NEFT and RTGS as convenient and secure as the former two types of payments. The NPCI has assured that it will not store any data regarding this functionality, therefore offering data protection.
Banks and Stakeholders to Collaborate
Banks are expected to provide this facility through digital channels and at branches for in-person transactions. In disputes, the resolution will involve collaboration between the remitting and beneficiary banks using a unique lookup reference number and transaction logs.
This initiative follows the RBI’s October 2024 announcement emphasizing the importance of accurate fund transfers. By implementing this facility, the central bank aims to minimize errors, enhance customer confidence in digital banking, and improve the efficiency of electronic payment systems in India.
With the April 2025 deadline, banks have been urged to accelerate preparations to meet the compliance requirements, ensuring a smooth transition for customers nationwide.
