The Reserve Bank of India (RBI) has unveiled comprehensive new guidelines for Domestic Money Transfer (DMT) services, consolidating existing regulations to improve accessibility and security for small-value fund transfers across India. These directions, officially titled the Reserve Bank of India (Domestic Money Transfer) Directions, 2026, became effective on November 11, 2026.
The primary objective of this revised framework is to facilitate easier remittances, particularly for migrant workers and individuals who frequently rely on cash-based transfers to support their families in different parts of the country.
Cash Pay-out Facility: Limits and Procedures
Under the new rules, customers with bank accounts can send money to beneficiaries who do not hold bank accounts, utilizing a cash pay-out facility. Key provisions include:
- A maximum limit of ₹10,000 per single transaction.
- A monthly ceiling of ₹25,000 per beneficiary.
- Recipients can collect cash through various authorized channels, including ATMs and Business Correspondents (BCs).
- Remitting banks are mandated to maintain detailed records of the beneficiary's name and address.
Transfers for Customers Without Bank Accounts
The RBI has also addressed the needs of walk-in customers who do not possess bank accounts but wish to send money. These individuals can deposit cash at bank branches and:
- Remit up to ₹50,000 to a beneficiary's bank account via the National Electronic Funds Transfer (NEFT) system.
- Facilitate transfers through ATMs and BC agents, though these are subject to stricter limits: ₹5,000 per transfer, with a monthly cap of ₹25,000 per remitter.
Banks and agents involved in these transactions must adhere to the applicable cash deposit provisions outlined in the Income-Tax Act, 2025.
Enhanced Safeguards Against Misuse
To prevent misuse and bolster security, the central bank has directed all involved entities—banks and non-bank institutions—to strengthen their transaction monitoring mechanisms. Specific safeguards include:
- Vigilant monitoring of transaction frequency.
- Investigation into any unusual increase in credits.
- Mandatory reporting of suspicious transactions to relevant authorities.
- Customers must receive alerts when funds are credited through domestic money transfer facilities.
- Remitting banks are required to include sender details in IMPS or NEFT transaction messages and clearly identify cash-based remittances.
- All transfers should be processed in real-time or as close to real-time as technically feasible.
Charges and Grievance Redressal
The RBI has granted flexibility to banks and non-bank entities to determine reasonable charges for their domestic money transfer services, opting not to prescribe a uniform fee structure. Additionally, service providers are obligated to establish effective customer grievance redressal mechanisms to address any issues promptly.
Scope of the New Directions
The new Domestic Money Transfer rules apply broadly to a range of financial institutions, including:
- Scheduled commercial banks
- Regional Rural Banks (RRBs)
- Urban co-operative banks
- State co-operative banks
- District central co-operative banks
Authorized payment system operators and participants are also covered where applicable, with inter-bank settlements required to use RBI-approved payment systems. It is important to note that card-to-card transfers remain outside this framework and will continue to be governed by separate regulations.