India: RBI Puts Cash Money Transfer Rules in One Rulebook, Adds Anti-Mule Checks
India’s central bank has gathered its scattered rules on small cash money transfers into one rulebook. The Reserve Bank of India (RBI) released the Domestic Money Transfer Directions, 2026 this week, keeping the existing transaction limits but spelling out tighter checks on identity, authentication and suspicious activity. The rules matter most for the migrant workers who send cash home to families through bank branches and neighbourhood agents.
Key facts
- Walk-in customers at a bank branch can send up to ₹50,000 in cash into any bank account through NEFT, whether or not they bank there.
- Cash transfers through business correspondents (local banking agents), ATMs and similar channels are capped at ₹5,000 per transaction and ₹25,000 a month per sender.
- Banks may pay out cash to people without a bank account, up to ₹10,000 per transaction and ₹25,000 a month per recipient.
- Senders must register with a verified mobile number and a self-certified identity document, and every transfer needs an extra layer of authentication.
- The directions replace earlier RBI circulars from October 2011 and July 2024 and apply with immediate effect.
What changed, and what did not
Domestic money transfer, often shortened to DMT, is the service that lets someone walk into a branch or up to a corner-shop banking agent, hand over cash, and have it land in a relative’s account hundreds of kilometres away. India’s National Electronic Funds Transfer system (NEFT) and Immediate Payment Service (IMPS) carry most of these payments.
The new directions do not raise or cut the limits. Instead, they pull years of separate instructions into a single document, so banks and payment firms work from one clear set of rules. They cover scheduled commercial banks, regional rural banks, urban, state and district co-operative banks, and authorised payment system operators. Card-to-card transfers stay outside the framework and keep their own guidelines.
The bigger change is in the controls. Banks and agents must now include the sender’s details in every IMPS or NEFT message, plus a marker showing the payment started as cash. Banks and non-banks must run velocity checks (alarms that trip when money moves unusually fast or often), send customers alerts when money is credited to their accounts, and investigate any sudden surge of credits into one account or a group of accounts. Suspicious transfers must be reported to the authorities.
Why it matters
Cash transfers are a lifeline for workers who do not carry full identity or address papers, or who still prefer cash to apps. At the same time, the same channel can be abused to move scam proceeds through “mule” accounts, where many small deposits flow into accounts rented or borrowed from others. Marking each cash-based payment and tracking the sender gives banks a clearer trail when fraud investigators come knocking.
The rules also say transfers should be real-time or near real-time and must settle only through RBI-approved payment systems. Banks and non-banks may charge reasonable fees, and customers who have complaints can take them to the RBI’s Integrated Ombudsman Scheme.
For the wider region, India’s approach is a useful reference. Many Asian markets, from the Philippines to Indonesia, rely on agent networks to reach unbanked users, and regulators are searching for ways to keep that access open while closing the door on money mules. India is choosing better data and monitoring over lower limits.
What to watch
- How quickly banks and business correspondents update their systems to tag cash-based payments and collect sender details.
- Whether the extra authentication step slows down transfers or pushes some users towards informal channels.
- Any follow-up guidance from the RBI on fees or mule-account detection as UPI and cash transfers keep growing.
Related: India: 10 years after the note ban, cash with the public has doubled · How a national payment system works
Sources: Business Standard (November 2026) · PSU Watch (November 2026) · Indian Opinion (November 2026)
