RBI mandates name verification for RTGS, NEFT

The Reserve Bank of India (RBI) has issued a directive for banks to implement a beneficiary account name verification feature for Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. This initiative, aimed at enhancing security and reducing errors, mirrors the functionality already available in Unified Payments Interface (UPI) and Immediate Payment Service (IMPS) transactions.

Announced in an official circular, the RBI has tasked the National Payments Corporation of India (NPCI) with developing the required technology for this service. Participating banks are mandated to implement the feature by April 1, 2025, ensuring a uniform rollout across the banking ecosystem.

Under this system, customers transferring funds through internet banking, mobile banking, or bank branches will be able to verify the beneficiary's account name before finalizing the transaction. Upon entering the beneficiary’s account number and IFSC code, the system will fetch and display the account holder’s name for confirmation. This additional layer of transparency is expected to minimize errors and deter fraudulent activities.

In cases where the account name cannot be displayed due to technical or other reasons, the remitter will have the option to decide whether to proceed with the transaction. Importantly, the RBI has clarified that banks must provide this service free of charge to all customers.

The directive applies to all banks participating in RTGS and NEFT systems, whether as direct members or sub-members. By introducing this feature, the RBI aims to bolster customer trust, improve transaction accuracy, and streamline the digital fund transfer experience.

This measure is part of a broader strategy by the central bank to enhance the security, reliability, and user-friendliness of India’s digital payment systems. By extending account name verification to RTGS and NEFT, the RBI seeks to align these traditional systems with the advanced security features offered by newer payment platforms.