Domestic Money Transfer - Relaxations

Domestic Money Transfer - Relaxations

RBI/2011-12/213

DPSS.PD.CO.No. 62/02.27.019/2011-2012

October 5, 2011

The Chairman and Managing Director / Chief Executive Officer

All Scheduled Commercial Banks including RRBs /

Urban Co-operative Banks / State Co-operative Banks /

District Central Co-operative Banks/Authorised Card Payment Networks

Madam / Dear Sir

Domestic Money Transfer- Relaxations

At present only banks are permitted to initiate money transfers in the country subject to adherence of KYC/AML guidelines. A large number of people, particularly the migrant population, do not have access to formal banking channels for want of proof of identity/address. Consequently, they face difficulties in using the authorized channels for transferring funds. Reserve Bank has been receiving frequent representations to open up the formal banking channel to facilitate fund transfers of small value, subject to monthly ceilings and monitoring, to give impetus to the process of financial inclusion. We are issuing these guidelines after having reviewed the related issues. These relaxations are expected to provide money transfer facilities in a safe, secure and efficient manner across the length and breadth of the country.

2. The relaxations fall under the following three categories:

Liberalizing the cash pay-out arrangements for amounts being transferred out of bank accounts to beneficiaries not having a bank account and enhancing the transaction cap from the existing limit of Rs. 5,000 to Rs. 10,000 subject to an overall monthly cap of Rs. 25,000 per beneficiary.

Enabling walk in customers not having bank account (for instance migrant workers) to transfer funds to bank accounts ( of say family members or others) subject to a transaction limit of Rs. 5,000 and a monthly cap of Rs. 25,000 per remitter.

Enabling transfer of funds among domestic debit/credit/pre-paid cards subject to the same transaction/monthly cap as at (b) above.

3. Operational instructions are detailed in the Annex.

4. Banks/ non-banks may adhere to the following while enabling the domestic fund transfers enumerated above.

Banks/non-banks shall put in place a robust system of safeguards including velocity checks and alerts to customers about credit into accounts using this facility. Any unusual spurt in volume of credits in a particular account/group of accounts shall be immediately investigated. Appropriate authorities shall be alerted regarding suspicious transactions.

Such fund transfers are expected to be effected on a real/near real time basis.

The total outstanding amount on a prepaid payment instrument shall not at any point of time exceed the limits prescribed in the extant guidelines on the RBI on the policy guidelines for issuance and operation of prepaid payment instruments.

Inter-bank settlement of funds shall be effected using RBI approved payment systems only.

Banks/non-banks may fix reasonable charges to popularise the scheme.

Banks/non-banks may put in place appropriate systems for redressal of customer grievances.

Customer grievances under this scheme shall fall under the purview of the Reserve Bank of India’s Banking Ombudsman Scheme.

5. This directive is issued under section 18, of the Payment and Settlement Systems Act 2007, (Act 51 of 2007).

6. Please acknowledge receipt.

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