In furtherance of its ongoing efforts to enhance financial inclusion, the Reserve Bank of India (RBI) has revisited and updated the Domestic Money Transfer (“DMT”) framework. Originally introduced in 2011 under Circular DPSS. PD. CO. No. 622/02.27.019/ 2011-2012 dated October 5, 2011 (the "2011 Framework"), the DMT guidelines were designed to facilitate domestic remittances, particularly benefiting migrant workers and individuals without access to formal banking services. The revised framework, incorporates below key modifications to align with evolving trends in banking, payment systems, and know your customer protocols:
(i) remitting banks must maintain beneficiary details, including name and address, for cash pay-out services;
(ii) for cash pay-in services, remitting banks and business correspondents must register the remitter using a verified phone number and an officially valid document in line with the RBI's KYC Master Directions 2016.
(iii) remitter transactions to be validated with an additional factor of authentication.
(iv) remitting banks must comply with provisions of the Income Tax Act, 1961, in connection with the cash deposits.
(v) remitting bank must include the remitter's details in the IMPS/NEFT transaction message, along with an identifier to mark the transfer as a cash-based remittance.
(vi) card-to-card transfers are excluded from the DMT framework and will be governed separately.
All other provisions of the 2011 Framework, including transaction limits, remain unchanged. These revisions have been effective since November 1, 2024.
In conclusion, the revised DMT framework introduced by the RBI reaffirms its commitment to expanding financial inclusion, particularly for those underserved by traditional banking services. By instituting stricter KYC requirements, mandating additional authentication measures, and reinforcing compliance with income tax provisions, the RBI aims to bolster the security and traceability of cash-based remittances. Additionally, the decision to exclude card-to-card transfers from the DMT framework reflects a tailored approach to the evolving landscape of digital payments. The updated framework, effective from November 1, 2024, signifies RBI’s adaptive response to both technological advancements and the regulatory needs of India’s remittance ecosystem.