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

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 (RBI), 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 (PMJDY).

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).

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.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel