RBI Revised Framework On Domestic Money Transfer, Applicable from November 01
The Reserve Bank of India (RBI) has issued new revised framework on Domestic Money Transfer (DMT) for the stronger Know Your Customer (KYC). The framework is focused on banking services and payment systems. Following the RBI’s July 24, 2024 circular, the new revised framework has been made applicable from November 01, 2024.
These guidelines have been issued to insure safety in domestic money transfers. After the release of the revised framework, RBI has noticed a significant increase in the number of banking outlets, an improvement in the payment systems for fund transfers and has also made the requirements of Know Your Customer (KYC) easy. Now, people have numerous digital options to transfer funds. RBI has issued the new Domestic Money Transfer (DMT) framework after examining the older services under DMT framework. The new framework aims towards practicing strong and secure money transfers cashlessly and digitally inside the country, making India more developed.
RBI’s circular released on July 24, 2024 states that, “The framework for Domestic Money Transfer (DMT) was introduced in 2011, vide RBI circular DPSS.PD.CO.No.622/02.27.019/2011-2012 dated October 5, 2011. 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,”.
The following changes have been made to the newly released Domestic Money Transfer (DMT) framework.
Cash Pay-out Service
- The remitting bank will keep and maintain the record of the name and address of the beneficiary person.
Cash Pay-in Service
- Remitting banks/Business Correspondents (BCs) are compulsory to register the remitter based on his/her verified phone number and a self-certified ‘Officially Valid Document (OVD)’, a passport, PAM card, Aadhar Card, Voter ID card and driving licence issued by the Unique Identification Authority of India.
- Each and every transaction made by the remitter will be validated by the Additional Factor of Authentication (AFA). AFA is for additional security purposes which decreases the unofficial transfers and ensures the safety of the customers against potential financial fraud.
- Note the point that card-to-card transfer system has been removed from the newly launched DMT framework.
What is Cash Payout Service?
A circular released by RBI on October 5, 2011, states that “banks are permitted to provide services that facilitate the transfer of funds from the accounts of their customers for delivery in cash to the recipients not having bank accounts at an ATM or through an agent appointed as Business Correspondent. It has been decided to raise the ceiling on the value of such transfers from Rs. 5,000 to Rs. 10,000 per transaction, subject to the cap of Rs. 25,000 per month. It has been further decided to permit banks to facilitate such fund transfers through any other authorized payment channels as well. The remitting bank shall obtain full details of the name and address of the beneficiary.”
Cash payout service is a bank service that permits its customers to transfer their funds (money) from their bank account to a person (beneficiary) who does not have an account.
What is a Cash Pay-In Scheme?
A circular released by RBI on October 5, 2011, states that “a walk-in customer at a bank branch can remit funds up to Rs. 50,000 to the bank account of a beneficiary through NEFT. Besides, banks are also permitted to allow such customers to transfer funds to a Bank account of a beneficiary through BCs, ATMs, etc. up to a maximum amount of Rs.5,000 per transaction with a monthly cap of Rs. 25,000. Such a walk-in customer needs to provide minimum details like his name and complete address to the remitting bank.”
Cash Pay-in Scheme is a domestic money transfer service that permits remitting banks and Business Correspondents (BCs) to register remitters and validate transactions.
