The Reserve Bank of India (RBI) has introduced a new framework for domestic money transfers (DMT), RBI rules for cash deposit and withdrawal focusing on banking services and payment networks. The rules aim to ensure adherence to financial legislation and enhance security, amidst the advancement of cashless and digital transactions.
According to the RBI circular dated July 24, 2024, a review of the different services provided under the existing framework was recently conducted
RBI rules for cash deposit and withdrawal
“The RBI circular introduced the framework for Domestic Money Transfer (DMT) in 2011.” On October 5, 2011, DPSS.PD.CO.No.622/02.27.019/2011-2012 was issued. Since then, the number of banking locations has significantly increased, payment methods for money transfers have advanced, KYC criteria have become easier to complete, etc., and consumers now have a variety of digital options for money transfers.
The RBI claims that the following adjustments are being made in light of the review:
Pay-in Service for Cash
All about What is cash pay in rbi new guidelines pdf
According to the Master Direction – Know Your Customer Direction 2016 as revised from time to time, remitting banks and Business Correspondents (BCs) must register the remitter using a confirmed cell phone number and a self-certified “Officially Valid Document (OVD).”
A remitter must use an Additional Factor of Authentication (AFA) to verify each transaction. Regarding cash deposits, remitting banks and their BCs must abide by the provisions of the Income Tax Act of 1961 and the rules and regulations adopted thereunder (as amended from time to time).
The NEFT/IMPS transaction message must include the remitter bank’s information and a cash-based remittance identification, with card-to-card transfer guidelines excluded from the DMT framework.
Payout Service in Cash
The beneficiary’s name and address must be obtained and maintained on file by the remitting bank.
Transferring money from bank accounts to recipients without bank accounts is known as a cash payout. “Banks are permitted to provide services which facilitate the transfer of funds from their customers’ accounts for delivery in cash to the recipients who do not have bank accounts at an Automated Transaction Machine (ATM) or through an agent appointed as Business Correspondent,” states the RBI circular dated October 5, 2011.
Banks are allowed to enable fund transfers using other approved payment channels, with the remitting bank obtaining full details.
The value of these transactions will now be limited to Rs. 10,000 per transaction instead of Rs. 5,000, with a monthly limitation of Rs. 25,000.