The Reserve Bank of India (RBI) has proposed a new feature to help reduce fraud in electronic transactions. On Monday, the RBI announced plans to introduce a lookup facility for beneficiary accounts in the Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. This feature will allow users to verify the name of the beneficiary before completing any transaction.
Currently, when making payments through NEFT or RTGS, the sender (remitter) cannot view the name of the beneficiary account. This leads to risks of sending money to incorrect or fraudulent accounts. The proposed lookup feature aims to eliminate this issue by allowing users to check the beneficiary’s name before proceeding.
This new feature will work similarly to other real-time payment systems in India, such as the Unified Payments Interface (UPI) and Immediate Payments Service (IMPS), which already provide this verification option. UPI, for instance, shows the name of the account holder before making a payment, giving users an opportunity to confirm the details.
The RBI has instructed all banks that are part of the NEFT and RTGS systems to roll out this facility by April 1, 2025. The good news for customers is that the lookup service will be provided free of charge. Users can access the service through their internet and mobile banking platforms. They will also be able to use the facility at bank branches for in-person transactions.
The National Payments Corporation of India (NPCI), which handles payment systems in India, has been assigned the responsibility of developing and implementing this new feature. NPCI will work on connecting all member banks to ensure the lookup service is available to users across the country. The feature will function by fetching the beneficiary’s account name based on the account number and IFSC code entered by the remitter, using the bank’s core banking system (CBS).
Both the remitting and beneficiary banks will be required to store data related to the lookup queries and their responses. However, NPCI will not be allowed to store any data associated with these lookup requests. This ensures the privacy of users is maintained while also preventing any misuse of sensitive information.
The introduction of this feature is a significant step in improving the safety and security of digital payments in India. By ensuring that remitters can confirm the beneficiary’s details before transferring funds, the RBI aims to make the payment process more transparent and reduce the chances of fraud.
The RBI’s new lookup facility will help users verify the beneficiary’s account name before initiating a transaction in the NEFT and RTGS systems. It will be available to all users free of charge and is expected to roll out by April 2025. This move is set to enhance the safety of digital transactions in India and prevent fraud.
