The Reserve Bank of India (RBI) has provided an impetus to financial inclusion by liberalising money transfer across the country. The apex bank has issued guidelines to open up the formal banking channel to facilitate fund transfers of small value, subject to monthly ceilings and monitoring.

Currently, only banks are permitted to initiate money transfers in the country, subject to the adherence of 'know-your-customer' guidelines. As a result, many individuals, particularly the migrant population, have no access to formal banking channels to transfer funds back home, owing to the lack of proofs of identity/address.

However, following the guidelines issued by RBI, the amount that can be transferred from the customer's bank account to beneficiaries not having a bank account has been liberalised. The transaction cap has also been increased from the current limit of Rs 5,000 to Rs 10,000, capped at Rs 25,000 per beneficiary per month. The remitting bank would also have to obtain the complete details of the beneficiary (name and address) for the transaction.

Walk-in customers, too, can transfer up to Rs 5,000 per transaction to bank accounts of family members, or subject to a maximum of Rs 25,000 per remitter, after providing the details to the remitting bank. Fund transfers among domestic debit/credit/pre-paid cards would also be subject to the same transaction/monthly cap. Until now, prepaid cards could be used only for payments of goods and services. However, after reviewing the 'potential reach of such cards', RBI decided to allow card-to-card transfers, subject to the notified limits.

According to RBI's operational guidelines, these fund transfers are expected to be effected on a real/near-real time basis. And, banks may levy 'reasonable charges' to popularise the scheme. (Business Standard)