The Delhi High Court has ordered the Reserve Bank of India to implement a Beneficiary’s Name Lookup Facility for RTGS and NEFT transactions to combat cyber fraud. Justice Pratibha M Singh underscored the urgent need for this system to protect consumers from fraudulent transfers, highlighting its significance in enhancing security in digital payments.
New Delhi: The Delhi High Court has directed the Reserve Bank of India (RBI) to swiftly implement a Beneficiary’s Name Lookup Facility for RTGS and NEFT payment systems. This step aims to reduce cyber frauds and protect innocent consumers who unknowingly transfer funds to fraudulent accounts.
Justice Pratibha M Singh, in her December 21 ruling, emphasized the urgency of such a system, stating that a delay in its implementation could adversely impact thousands of individuals. She stressed that the system must be activated across all banks without further delay.
The High Court was addressing a series of petitions involving the misuse of trademarks by fraudulent websites to deceive unsuspecting people. The court noted,
“Steps being taken by the RBI for implementation of the said Beneficiary’s Name Lookup Facility for RTGS and NEFT transactions are extremely crucial to prevent cyber fraud like the kind of fraudulent activity that are being dealt with in this case.”
It further instructed the RBI to expedite the process and inform the Indian Bank Association (IBA) and its member banks about the facility for immediate implementation.
Currently, while UPI and IMPS payment systems allow senders to verify the name of the recipient before completing a transaction, no such mechanism exists for RTGS and NEFT. The RBI’s counsel confirmed that the Beneficiary’s Name Lookup Facility has already been developed for these systems and is undergoing testing. Once functional, this system will allow customers to confirm the recipient’s name before initiating any payment, adding an essential layer of security to these widely used payment methods.
Justice Singh underscored the potential of this facility to prevent financial fraud and protect innocent consumers, adding,
“The RBI shall, without any delay, create the said facility referred to as, Beneficiary’s Name Lookup Facility.”
The lack of a name verification feature in RTGS and NEFT payment systems has left consumers vulnerable to cyber frauds. Fraudsters often misuse the trademarks of legitimate entities to create fake websites or accounts, deceiving consumers into transferring funds to fraudulent beneficiaries.
The High Court’s intervention comes at a critical time, as digital payments in India are growing exponentially. By making beneficiary verification mandatory, the RBI can curb fraudulent activities and bolster trust in digital payment systems.
The court’s directive is expected to fast-track the implementation of the Beneficiary’s Name Lookup Facility, ensuring it becomes a standard feature for RTGS and NEFT payments across all banks. Once implemented, this facility will significantly reduce cases of fraud by providing consumers with a clear indication of who they are transferring money to.
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