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Published on 10 April 2025

RBI Updates Domestic Money Transfer Framework for Enhanced Security and Efficiency

Overview of the Updated Domestic Money Transfer Framework

The Reserve Bank of India (RBI) has revised its framework for Domestic Money Transfers (DMT), initially set in 2011, to accommodate advancements in banking practices, payment solutions, and Know Your Customer (KYC) protocols. These modifications will come into effect on November 1, 2024.

Key Changes in the Framework

The new framework introduces several essential changes aimed at enhancing the safety and efficiency of domestic money transfers:

1. Record-Keeping Enhancements

  • Cash Pay-out Service: The remitting bank is now required to record the name and address of the beneficiary, ensuring better tracking and accountability of transactions.

2. Stricter Verification Measures

  • Cash Pay-in Service:
    • Remitting banks and Business Correspondents (BCs) must register the remitter using a verified mobile phone number and a self-certified ‘Officially Valid Document (OVD)’ in line with the Master Direction – Know Your Customer Direction 2016, as amended periodically.
    • Each remittance will now require validation through an Additional Factor of Authentication (AFA) to increase security.
    • Compliance with the Income Tax Act, 1961 (and related rules/regulations) regarding cash deposits is mandatory for remitting banks and BCs.
    • Details of the remitter must be included in the IMPS/NEFT transaction messages.
    • Transactions must include an identifier to clearly denote the transfer as cash-based remittance.

3. Clarifications on Card-to-Card Transfers

  • The guidelines regarding Card-to-Card transfers will not fall under the updated DMT framework and will instead follow separate regulations as designated for such instruments.

4. Continuation of Previous Guidelines

  • All other instructions provided in the initial circular dated October 5, 2011, including transaction limits, remain unaffected by this update.

Legal Basis and Effective Date

This circular is issued under Section 18, in conjunction with Section 10 (2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007). The updated framework will be effective from November 1, 2024.

Conclusion

These updates reflect the RBI's commitment to enhancing the security, efficiency, and transparency of domestic money transfers. Stakeholders, including banks and authorized payment system operators, are encouraged to review these changes and prepare for their implementation by the specified date.

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