The Reserve Bank of India (RBI) announced on Monday the launch of a new beneficiary bank account name verification feature for both the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. This facility will allow remitters to verify the beneficiary’s name before initiating a transaction, reducing the risk of errors and fraudulent transfers.
Currently, systems such as Unified Payments Interface (UPI) and Immediate Payments Service (IMPS) allow senders to verify recipient details before completing payments. With the introduction of this new feature, the RTGS and NEFT platforms will adopt similar functionalities, ensuring that the beneficiary’s account details match the name provided by the sender.
The National Payments Corporation of India (NPCI) has been tasked with developing and implementing the verification system, which will soon be available across all participating banks. The new facility will be accessible through internet and mobile banking, and customers initiating transactions at bank branches will also be able to verify beneficiary details before processing payments.
Key Benefits
The introduction of the beneficiary name verification facility brings several advantages aimed at improving the overall transaction experience:
Enhanced Transaction Accuracy: By allowing remitters to verify the beneficiary’s name before initiating payments, the risk of errors caused by incorrect account details is significantly reduced. This ensures that funds are transferred to the correct recipient, minimizing the occurrence of failed or erroneous transactions.
Improved Security: With real-time verification of beneficiary details, the feature acts as a safeguard against fraud. It helps prevent situations where funds are mistakenly sent to the wrong account, reducing the chances of fraudulent activities and unintentional transfers, which could otherwise lead to financial losses.
Streamlined Payment Processes: By providing an additional layer of assurance, this verification feature helps customers feel more confident in their transactions. It mimics the functionality available on other platforms, such as UPI and IMPS, making the process more familiar and convenient, especially for those who are already accustomed to verifying account details before confirming payments.
Reduced Operational Risks: Financial institutions will also benefit from this feature by reducing the volume of disputed transactions due to incorrect beneficiary information. This leads to lower operational overhead and enhances customer trust in the reliability and security of the payment systems.
Faster Resolution of Payment Issues: In cases where discrepancies are found between the sender’s details and the beneficiary’s account, the verification system will allow for quicker identification of errors, enabling swift correction and reducing the time required to resolve issues that may arise during the payment process.
Overall, the beneficiary name verification feature will strengthen the security, accuracy, and efficiency of RTGS and NEFT transactions, further promoting the adoption of digital payment systems while minimizing potential risks.
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