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Tuesday, April 7, 2015

Why getting the account number right is very necessary while transferring funds online

When was the last time you went to a bank to transfer money?

Though the option is still open, banks say 80-85% of their NEFT and RTGS transactions are happening through net-banking or mobile apps. Online transfer is the preferred choice not only because it is convenient but because it is faster and there are no additional charges. All you have to do is register a person as a 'beneficiary' by giving his/her account number and bank IFSC code and you can transfer money real-time. But what if you accidentally send money to a wrong bank account? The account number length varies from 9 to 18 digits. IFSC is an other 11-digit code. The probability of error is extremely high especially when it means putting one digit wrong in a series of 29 digits.

To reduce the chances of mistake, as per RBI guidelines, banks are required to take certain measures. First, the customer is required to put the beneficiary account number twice. This is to double-check that the digits do not go wrong. Also, if there is a mismatch between the account number and IFSC code, the system will not accept the entry . Moreover, post adding a beneficiary , there is also a cooling period of 30 minutes during which you cannot transact.

"A third level of check happens during the cooling period as the customers are sent text notifications on their registered mobile number confirming the account number of the beneficiary they have added to their account Customers can reconfirm the number again at this stage," says a spokesperson from HDFC Bank. Some banks also give you the option of adding the beneficiary's mobile number when you register him/her so that the person can also be intimidated via SMS.

Why getting the account number right is very necessary while transferring funds online However, the chances of error still exist. While it is compulsory to mention the name of the beneficiary and the IFSC code, the reliance for transferring money is only on the account number. The notification on electronic transfer from the central bank says, "Credit will be effected based solely on the beneficiary account number information and the beneficiary name particulars will not be used." "It is generally the account number where the customers go wrong," says Jairam Sridharan, president, retail lending and payments, Axis Bank. So, if you accidentally put one digit wrong and it doesn't correspond to the account holder's name, the transaction can still go through and the money can be transferred. It is also possible that you had the wrong account number to begin with. The case will be the same if you transferred '30,000 where you had to pay only '3,000, that is, one extra zero.

The RBI guidelines say, "Responsibility to provide correct inputs in the payment instructions, particularly the beneficiary account number information, rests with the remitter or originator." So, the onus of the mistake will solely be on you. In case it happens, you can only seek help from the bank (see graphic). Inform the bank immediately . "The later you alert, the murkier the case becomes as banks become more suspicious," says Sridharan. The turnaround time also depends on how quickly the customer alerts his bank, the banks involved and the stage at which the transaction is at."If the remitter and beneficiary accounts are with the same bank, the process is usually quicker. Also, if you alert the bank within an hour, most probably the money wouldn't have been credited yet and can be reversed immediately ," says Sridharan.

The beneficiary has to be intimidated as well. Without the permission from the beneficiary , the bank cannot reverse the transaction. If the beneficiary says no, then you'll have to take the legal recourse and approach a court.

The RBI clearly states that "in cases where it is found that credit has been afforded to a wrong account, banks need to establish a robust, transparent and quick grievance redressal mechanism to reverse such credits and set right the mistake." However, this is not a regular procedure for banks and is clearly complicated. "Since the occurrences are pretty low, say two to three cases a quarter, most of the banks do not have a formal redressal process in place," says Sridharan. "It has to be an accident and the customer must have solid reasons for us to initiate the process," adds the HDFC Bank spokesperson.

Therefore, it is important that you take precautions on your end. Simple checks like sending a smaller amount, say '10 before transferring a bigger amount, copy-pasting it rather than typing the account numbers will save you from a lot of trouble later.

Source : Economic Times

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