Few years back, transferring money online was a dream and sending money through other methods were either unsafe or time consuming for migrants and poor. At present few banks are permitted by RBI to initiate money transfers in our country subject to adherence of KYC(know your customer)/AML (anti money laundering)guidelines.
A large number of people, particularly the migrant laborers and factory workers do not have a saving account in the city and even not able to open an account due to lack of valid address and ID proof, as a result they face difficulties to save their earnings in a safe place and look out for solution to send money to their families.
Reserve Bank have received frequent bank’s applications to open up the formal banking channel to facilitate fund transfers of small value, subject to monthly ceilings .
RBI have issued some guidelines after having reviewed the related proposals. Relaxations given to few Banks to provide money transfer facilities in a safe, secure and efficient manner across the length and breadth of the country.
These relaxations have the following categories:
1. Liberalize the cash pay-out arrangements for amounts being transferred out of bank accounts to beneficiaries not having a bank account with monthly cap of Rs. 25,000 .
2. Enabling walk in customers(who doesn’t have bank account) to transfer funds to bank accounts ( family members or others) subject to max. transaction limit of Rs. 25,000 per remitter.
3. Enabling transfer of funds among domestic debit/credit/pre-paid cards subject to the same transaction limits.
4. Banks shall put in place a robust system of safeguards including velocity checks and alerts to customers about credit into accounts using this facility.
5. Such fund transfers are expected to be effected on a real/near real time basis.
6. Banks/Non-Banks may fix reasonable charges to popularize the scheme.
Customer grievances under this scheme falls under the purview of the Reserve Bank of India’s Banking Ombudsman Scheme.
Any unusual spurt in volume of credits in a particular account/group of accounts shall be immediately investigated. Appropriate authorities shall be alerted regarding suspicious transactions.
This directive is issued under section 18, of the Payment and Settlement Systems Act 2007, (Act 51 of 2007).
Mobile Banking :
Banks are permitted to provide services which facilitate transfer of funds from the accounts of their customers for delivery in cash to the recipients not having bank accounts at an ATM or through an agent appointed as Business Correspondent. It has been decided to raise the ceiling on the value of such transfers from Rs. 5,000 to Rs. 10,000 per transaction subject to the cap of Rs. 25,000 per month. It has been further decided to permit banks to facilitate such fund transfers through any other authorized payment channels as well. The remitting bank shall obtain full details of the name and address of the beneficiary.
Payment of amounts to be credited to bank accounts (Cash Pay in Scheme) Presently, a walk-in customer at a bank branch can remit funds up to Rs. 50,000 to the bank account of a beneficiary through NEFT. Besides, banks are also permitted to allow such customers to transfer funds to a Bank account of a beneficiary through BCs, ATMs, etc. up to a maximum amount of Rs.5,000 per transaction with a monthly cap of Rs. 25,000. Such a walk-in customer needs to provide minimum details like his name and complete address to the remitting bank.
Card to Card transfers :
Cards (credit/debit/prepaid) as a means of payment and their acceptance at various delivery channels have been gaining popularity. While the debit cards are directly linked to the bank account of the customer, the credit card account and prepaid card accounts are held in the books of the bank which has been opened after due diligence by the banks. Prepaid payment instruments are issued by both banks and non-banks, the latter being permitted to issue only semi-closed prepaid cards. As on date, semi-closed prepaid cards are usable only for payments of goods and services (P2B).
Pay Point India is authorized by State Bank Of India, ICICI Bank and Yes bank to distribute the service of money transfer by appointing several retailers as “Customer Service Point” in remote village areas and in Metros as well.
The current remittance industry market size is about $500-$600 Billion per year. How much of this is actually Peer to Peer money transfer is highly debatable and speculative at best.