RBI Tightens Cash Pay-Out Service Norms for Banks

The Reserve Bank of India (RBI) has mandated stricter regulations for banks' cash pay-out services effective November 1, 2024. Banks must maintain detailed records of beneficiaries. The guidelines exclude card-to-card transfers. Authentication and verified documentation are necessary for cash pay-ins.

The Reserve Bank of India (RBI) has introduced stricter regulations for cash pay-out services at banks, making it mandatory for financial institutions to maintain detailed records of recipients. These new guidelines, which come into effect on November 1, 2024, aim to enhance transparency and accountability.

Cash pay-out services involve transferring money from bank accounts to beneficiaries who do not have a bank account. Under the revised framework, banks are required to keep the name and address of each beneficiary on record. This move is part of the RBI's revamp of its 'Domestic Money Transfer' guidelines, initially issued in October 2011.

For cash pay-in services, remitting banks and business correspondents must register the sender using a verified cellphone number and a self-certified 'officially valid document' (OVD) in line with Know Your Customer (KYC) norms. Additionally, every transaction must be authenticated by an extra layer of security.

These new regulations exclude card-to-card transfers, focusing instead on enhancing due diligence in other forms of domestic money transfers.

(With inputs from agencies.)