As court rules Citi can't get back $500 mn it wrongly paid, what does India's law say

To transfer money online, 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 another 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 mistakes, 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.

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 affected 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. 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. Inform the bank immediately. 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. 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.