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Banks may seek your OK for fund transfer to your account

By Somesh Jha
August 28, 2019 13:02 IST
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Under the proposed mechanism, the finance ministry has said banks will notify customers when someone tries to deposit money in their accounts, a government official said. 

Banks may soon seek your consent before allowing a transfer of funds to your account. 

The Union government has written to the Reserve Bank of India, seeking its views on a mechanism to enable willing bank customers to have control over deposits of money in their accounts. 

The move is a follow-up to instances of illicit deposits -- after demonetisaton -- in bank accounts opened under the Pradhan Mantri Jan-Dhan Yojana. 

Under the proposed mechanism, the finance ministry has said banks will notify customers when someone tries to deposit money in their accounts, a government official said. 

Customers will then have the option of accepting or rejecting the money transfer request, according to the official. 

 

However, this service may not be open to all customers because they may be required to pay for availing of this service, according to a proposal being discussed between the regulator and the government, the official added.           

 

The move is a follow-up to the announcement made by Finance Minister Nirmala Sitharaman in the Union Budget 2019-20. 

“Government will initiate steps to empower (bank) account holders to remedy the current situation in which they do not have control over deposit of cash by others in their accounts,” Sitharaman had said during the Budget speech. 

At present, the recipient’s permission is not required during fund transfers between bank accounts or even during cash deposits made in a bank account. 

A depositor needs the bank account number and IFSC [Indian Financial System Code] of the recipient’s bank to initiate transfers of funds through the Immediate Payment Services (IMPS), National Electronic Funds Transfer (NEFT), or Real Time Gross Settlement (RTGS). 

For a bank account transfer through the Unified Payments Interface (UPI), only the UPI ID or, in some cases, the mobile number of the recipient is required. 

The move to seek the recipient’s consent for depositing money will require a change in the bank’s core banking system (CBS). 

“Since banks may incur charges in extending this facility to its customers, they will be allowed to charge the customer for the service,” a senior finance ministry official said.  

The ministry official said the government had noticed instances of illicit deposits in bank accounts of customers in the recent past. 

“Investigative agencies suspect that funds have been moved from bank accounts of those involved in terror activities and recipients have refused any knowledge of such transfers,” the official said. 

Further, during the demonetisation period, the government found Rs 42,187 crore had been deposited in cash in 37.4 million Jan Dhan accounts between November 8, 2016, and December 30, 2016, the latter being the last date for depositing old notes. 

The government had launched a probe into these deposits, which accounted for 60 per cent of the money in Jan Dhan accounts during that period.

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Somesh Jha in New Delhi
Source: source
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