Receiving money through NEFT can put you in trouble
Moneylife Digital Team 08 January 2015

Despite directions from RBI, banks refuse to share details of the entity sending money through NEFT


The National Electronic Fund Transfer (NEFT), used by almost everyone to transfer money quickly, can also put the receiver in a difficult position. The main reason is, there are no details available about the remitter or sender and if the amount is large, then the recipient may end up facing Income Tax (I-T) Department queries. Remember what happened with Aishwarya Rai, when in 2006 she received a parcel containing 23,000 euros (around Rs14 lakh at that time) sent by an unknown person from the Netherlands?


Well, with banks hesitating in sharing details of the person or entity who is transferring money via NEFT, it may be you next time. Although the Reserve Bank of India (RBI) has directed banks to furnish appropriate details in passbook or account statement for credits sent and received by the customer through NEFT, all the recipient gets is just a name and amount. “A very generic mention as 'NEFT' or 'NECS' does not help customers in identifying the source of credits, particularly where multiple credits are afforded to their accounts through these products. The Core Banking Solutions (CBS) of banks should be enabled to capture complete information from the relevant fields in the messages, data files which can be displayed to customers when they access their accounts online or provided to them additionally when they approach the branch counters, help desks, call centres,” the RBI had said.


However, all the recipient gets to know is just a name. There are no details like sender’s PAN number, address and the cause/remark for the money transfer.


Often money launderers are found using bank accounts of low-income individuals for transferring money. In addition, due to the forceful implementation of the Jan Dhan Yojana, we have about 10 crore new bank accounts, out of which 73% do not have a single penny. But consider that tomorrow, if somebody uses these accounts to launder money, then without detailed information about the remitter, how is a poor Kalawati supposed to answer queries from the authorities, including but not limited to I-T department. In the absence of detailed information about the remitter, how will she explain the unaccounted money remitted into her account through NEFT?


Receiving funds from unknown remitters becomes an even bigger issue for non-governmental organisations (NGO), who need to give a receipt as well as I-T exemption certificate. If there is just a name of the remitter, how and where is an NGO, like Moneylife Foundation, supposed to send the receipt?


Another issue with NEFT fund transfer is the delay. According to RBI policy, banks need to afford credits to beneficiary accounts or return transactions (uncredited for whatever reason) to the originating / sponsor bank within the prescribed timeline. It also directed banks to move towards hourly settlement starting from 9am to 7pm on all week days and between 9am to 1pm on Saturdays. Yet, it appears that banks are still using the last part of the work-day or first hour of the next day for NEFT transactions.


Coming back to the Aishwarya Rai episode, the actor was grilled by the Customs official for two-and-a-half hours at the international airport as soon as she landed in Mumbai from Jodhpur. The parcel was allegedly sent by one Avineshwar from the Netherlands marked to the actress. It arrived at the Foreign Post Office in Mumbai during September 2006. Besides the currency, it also contained a top-brand shirt, a pair of binoculars, a DVD player and other electronic items. Following a notice, Aishwarya's father Krishnaraj Rai, on 15th November met Custom officials to clarify her position. However, the officials insisted to know details from Aishwarya, due to which the actor had to come to Mumbai to clarify her position. She was shooting for the movie 'Jodha Akbar' in Jodhpur at that time. After the enquiry, she was give a temporary clean chit by the Customs.


Therefore, it is high time the central bank issues another order mandating banks to share all details of the remitter who is sending money through NEFT or any other payment method to the recipient and actually penalises banks if there are persistent complaints about flouting the RBI’s order.

3 years ago
Help me plz
3 years ago
I have no money
4 years ago
I am in need of cash.any kind hearted person most welcome
srinivas acharya
5 years ago
third party payment ( rtgs/neft ) cusomer done by co oprative credit society difficult to find senders name ( Non enter a name of original sender information in neft/or r t gs software issued by banks)
pavithra k
6 years ago
Dipak Shah
6 years ago
Since Government is also encouraging Digital Payment then what is this?
Sanjay phukan
6 years ago
I want a lot of real cash rupees
9 years ago
1. Banks should be made accountable for investigation in every fraud arising out of cheque bounce. Other wise they will keep on issuing cheque book to every unreliable person. Actually they should ban the cheque felicity to that account holder for life time and Tag it to his PAN no so that he cannot get it in any other banks if he bounces his cheque 3 times. If it is implemented 50% of our all court cases will get reduced.
The whole country will feel proud of the system.
R S Murthy
9 years ago
Banks are fully aware of KYC rules and procedures. While opening the accounts are they not seeking address and identity proof?
Banks are not supposed to receive Rs.50000 or more in cash form for remittances without the PAN number. All single remittances of over 10 lakhs comes under scrutiny. In all remittance challans there is a place for the signature, name & address of remitter. Usually depositor himself deposits into his acount, he signs and writes his name.
When 3rd party deposits banks can easily verify the details and pass on them to the beneficiary. If banks are doing so it is nothing but negligence and derliction of duties. Even on our specific request if banks fail to provide we can always approach Ombudsman.
Still banks fail to provide or refuse to provide details, we can inform that the bank is remitter and make them a party in the proceedings initiated by Tax authorities. Then it is for the Banks to prove who is the real remitter.
Replied to R S Murthy comment 9 years ago
Thanks for your comment.
And thank god, finally you saw the light after the barrage of your comments. The article also say that banks should share complete details of remitter to the beneficiary. This exactly is not happening at present. In addition, when there are few remitters, then you may not face any issue, but when there are several remitters, then how would an individual or NGO is supposed to chase each one if banks fail to provide details?
R S Murthy
Replied to MDT comment 9 years ago
I could have replied in one lot all the points. It becomes lengthy. That is why I choose to put it in stages. Opening of an account is a contract between the customer and banker. Customer is entitled for certain benefits and priveleges and banker is entitled for certain charges. What all I do with my account say deposit and drawl, I do not need any details from the bank. If banker debits my account with charges, credits with interest or outside remittance, banker is duty bound to provide all particulars. Banker will not get unquestionable right to play with my account. If he is not taking care to protect my interests, I can always hold him responsible. We remit LIC premiums, electricity charges, property tax, telehone bills on line.The details of the remitter and his policy number, telephone no is provided to the beneficiary. This enables the beneficiary to account for properly. Then why not in the case of NEFT? We have to counter the bankers with valid reasons. They have to comply. No exscape. Whether it is one remitter or many, banker is bound to provide full deetails when he has choosen to touch my account. When I touch his ATM is he not asking for charges. Then how can he get away after medling with my account.
9 years ago
This is a really issue, some organisation to evade income tax or TDS payment to employees , are resorting to transfer the salary from third-party account into the employee account , where employee is in a fix on how to file his income , do we have some mechanism to monitor this, expose this ?
Peruvemba Subramanian Ramachandran
9 years ago
This is all the more true for organisations, whose members use NEFT for paying subscriptions or members or subscribers to magazines,etc. the amount being a fixed sum, one is hard pressed to identify the amount to the correct subscriber/member. I had experienced for the last 2 years from a Nationalised Bank, in respect of our coop society membership subscriptions.
Suketu Shah
9 years ago
NEFT has the loopholes mentioned but let us not overlook the fact that this was created by Congress led Chidambaram and not BJP.This means Congress created these loopholes.Let us give BJP some time to plug those loopholes.The article has valid points but bottom line is this problem has been created by Congress when they launched NEFT a few yrs ago.
R S Murthy
9 years ago
All readers kindly go through the news item appeared in Times of India on 6th January 2015.CBI collected data from 20 states and 7 UTs and found that there are 22,45,655 NGOs operating. Of these2,23,478 (just less than 10%) had filed their annual returns. This does not includes details from MP, Odisha, TN, Karnataka and Chattisgarh. Shall we accept nonavailability of details of remitters be the reason for not furnishing the accounts. One can imagine what sort of remittances are flowing through NEFT or RTGS into these accounts.NGOs are not celestial bodies to remain free from any regulation.
Replied to R S Murthy comment 9 years ago
Valid point. Charities/NGOs are a popular mode of money laundering. But that is precisely whey details of sender should be available on NEFT/RTGS so that these laundering NGOs cannot claim ignorance about sources of funds...
R Balakrishnan
9 years ago
A debate is not warranted at all. Simple disclosure of who has sent the money. Absolutely essential and if PMLA is to be followed in spirit and letter, banks must disclose this as a matter of routine. Banks unfortunately are the biggest agents for laundering.
Dipakkumar J Shah
9 years ago
Now in the name of PSB Merger , State Bank of India with their associates Bank like State Bank of Bikaner and Jaipur reduced their FDR Rates in two way and side. One way resuced the FDR Interest rates in line with SBI Rates , and second way reduced Senior Citizens additional rates which were given herebefore 0.50 % now reduced to 0.25%. At the time of Presentation of Budget it was assured to give 1 % additional rates of interest to seniors. But now reduced to 0.50 % and reduced further in line with SBI 0.25%. This is a one kind of Reducing the Competition between Bank to Bank which was here before!!
CCI is not observing any thing from such action !!!!!
Free Helpline
Legal Credit