New Delhi: The Reserve Bank of India on Wednesday tightened cash payout norms for banks, making it mandatory for lenders to maintain a record of cash recipients. This is aimed at curbing money laundering. This marks a shift from the RBI’s 2011 circular regarding domestic money transfers. “This circular is issued under Section 18 read with Section 10 (2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007),” said RBI. The decision was taken by the central bank after a review citing the “availability of banking outlets, developments in payment systems for funds transfers, and ease in fulfilling KYC requirements.”
What is a cash payout
Cash payouts are a mode of payment used by individuals who do not have a bank account to receive the money due to them under various government beneficiary schemes
This facility allows beneficiaries of a scheme to receive their benefit in cash form instead of actually opening a bank account.
How will banks maintain transparency?
Banks will now be required to maintain a record of every cash payout.
Banks will maintain a record of the beneficiary’s address and name.
RBI revises Cash pay-in norms
RBI has also tightened cash pay-in norms, or the payment of benefits to registered beneficiaries in their bank account.
Under these norms, banks will have to register the remitter using KYC norms.
Their verified mobile phone number and a self-attested officially valid document shall be secured by the bank or banking correspondent for official record keeping.
Additional factor authentication will be used to validate every cash pay-in by the registered remitter, said the RBI notification.
The bank will also know the details of the remitter shared in the message accompanying an IMPS or NEFT transaction, the RBI said.
RBI order details
The RBI order on cash payouts to beneficiaries will come into effect on November 1, 2024.
Further, the new norms will not apply to card-to-card money transfers, according to the notification.
The Reserve Bank of India tightened its rules for banks to record cash payouts related to government beneficiary schemes in a bid to check pilferage. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
