Introduction of Beneficiary Bank Account Name Look-up Facility for RTGS and NEFT Systems

In its continuous effort to enhance the safety, efficiency, and customer experience within the digital payment ecosystem, the Reserve Bank of India (RBI) has announced the introduction of a beneficiary bank account name look-up facility for Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems. This initiative was detailed in the Statement on Developmental and Regulatory Policies dated October 9, 2024, and is to be implemented by April 1, 2025.

Understanding the New Facility

Currently, real-time payment systems such as Unified Payments Interface (UPI) and Immediate Payments Service (IMPS) allow remitters to verify the name of the beneficiary before initiating a transaction. However, RTGS and NEFT, which are widely used for high-value and scheduled payments respectively, lack this functionality.

The newly proposed facility aims to bridge this gap by enabling remitters to confirm the beneficiary’s account name before initiating a transaction.

The system will work by fetching the beneficiary’s account name from the bank’s Core Banking Solution (CBS) based on the account number and IFSC entered by the remitter. The facility will be integrated into Internet banking, mobile banking, and even branch-based transaction services to ensure wide accessibility.

Key Guidelines for Implementation

The RBI has outlined specific requirements for banks participating in the RTGS and NEFT systems to ensure uniformity and reliability. Key instructions include:

1. Verification during Beneficiary Registration and Fund Transfers:Banks must enable name verification during beneficiary registration and one-time fund transfers where the beneficiary is not registered.Customers must also have the option to re-verify registered beneficiaries at any time.
2. Display of Beneficiary Name:The beneficiary account name, as fetched from the bank’s CBS, must be displayed to the remitter. In cases where the name cannot be fetched, the remitter can proceed with the transaction at their discretion, but specific alert messages must be displayed as per NPCI’s technical guidelines.
3. Data Privacy and Security:Banks must comply with data privacy regulations while implementing this facility.NPCI will not store any data related to the look-up process. Disputes, if any, will be resolved based on logs maintained by the remitting and beneficiary banks.
4. Preservation of Logs:Detailed logs of all queries, responses, and activities related to the name look-up must be maintained by both remitting and beneficiary banks.
5. No Additional Charges:The facility must be offered to customers free of charge.

Addressing the Need for the Facility

The introduction of this facility addresses critical gaps in the RTGS and NEFT systems:

1. Error Prevention:Mistakes in entering account numbers are a common cause of failed or misdirected transactions. The look-up facility provides an additional layer of verification, reducing the chances of such errors.
2. Fraud Mitigation:The facility helps combat fraud by allowing customers to verify the recipient’s name, thereby adding a layer of transparency and trust to the transaction process.
3. Enhanced Customer Experience:The facility aligns RTGS and NEFT with modern payment systems like UPI and IMPS, offering a seamless and reassuring experience to users.

Impact on the Payment Ecosystem

The implementation of the beneficiary name look-up facility is expected to have far-reaching effects on India’s payment ecosystem:

1. Increased Trust in Digital Payments:By enabling name verification, the facility builds confidence among users, encouraging greater adoption of RTGS and NEFT for both personal and business transactions.
2. Improved Efficiency in Dispute Resolution:With detailed logs and a unique look-up reference number, disputes can be resolved more efficiently, reducing operational burdens on banks.
3. Alignment with Global Standards:The move brings India’s payment systems closer to global best practices, enhancing the country’s reputation as a leader in digital payments innovation.
4. Support for Financial Inclusion:As the facility will be available even to customers visiting bank branches, it ensures that digitally underserved populations can benefit from the added security and reliability.

The introduction of the beneficiary bank account name look-up facility for RTGS and NEFT systems is a significant step forward in India’s journey toward a more secure, efficient, and customer-centric payment ecosystem.

By addressing errors, mitigating fraud, and enhancing trust, this initiative will not only benefit end-users but also strengthen the overall integrity of the financial system.

As banks work towards meeting the April 2025 deadline, the collaboration between RBI, NPCI, and participating banks will be critical to the successful implementation of this transformative measure.