Quote from: americandesi on July 05, 2013, 04:47:26 PM

Hello All,

I wanted to start a thread to discuss the views on whether NEFT / RTGS or any other RBI approved fund transfer method is safe to use during bitcoin trade.

Some of the issues that come to my mind are outlined below. Please feel free to discuss and give your thoughts. If i have left out any issues that you or someone whom you know has faced in the past, then throw it out here for discussion.

1) NEFT / RTGS transaction can be reversed by the originating person.

I did some research and skimmed through the RBI guidelines and found that before the amount is debited back from the beneficiary's account, the beneficiary's bank will have to take an authorization from the beneficiary. As per the RBI Guidelines, it is against the law to debit his account without his / her authorization eventhough the originating bank has made a request.

This is one of the reason, RBI advice banks to do a maker-taker check which includes parameter match like Name, Account Number, IFSC Code and the Branch before processing the transfer. This has been put in place as reversing the transaction is difficult if the amount is credited to a wrong account.

If this is the process, then doesn't this make NEFT and RTGS safe against reversing of transfers.?

2) NEFT / RTGS can be sent from a Hacked or a compromised account.
This is again a completely different story, though some of the banks have 2FA, there is some possibility that a transfer is made through a hacked account.
Again, this risk is implied when using any payment gateway.

So any thoughts / expert advise on why we cannot rely on NEFT / RTGS fund transfer for BTC trade.?

The issue is second point and the first point comes into the picture after second point

The issue goes a bit deep than just compromised account. NEFT payee add operation is always 2FA protected operation. On top of that it normally has cooling period to initiate actual transaction to that payee. This is normal SOP for NEFT payee add.

So how hacker is able to compromise
1. User's customer id + password ( very possible )
2. User's Mobile and access to SMS for NEFT Payee code verification ( Very tough, still possible if user's mobile is compromised or he is using apps like MightyText etc )

Above can happen in 3 cases
1. User's bank account is actually compromised and on top of that his mobile number registered in the system is also changed. Most of the time change of address, change of mobile number for alerts will require you to either visit branch or again its 2F protected operation, so it is very unlikely that this is the case.
2. User is lying that his account is compromised. This may happen.
3. Bingo. Bank's internal system is compromised either because of software fault or human/employee fault ( ie employee is involved in this stuff ). This is what happens most of the time in India.

Now lets say customer is asking for charge back due to any reason. What Bank will do ? They will block receiver's account, start investigation. blocking account means you can receive money in but can not withdraw. Also before the first investigation report bank will not notify you about this issue. Now lets see what Bank will do in above all 3 cases and what will happen to receiver account :
1. Bank will reverse the transaction. Receiver's account is flagged as it was the only account that is getting benifited out of this scam. Bank will not provide you any information on what happened. Your transaction history will be reviewed and your account will be categorized again ( Banks categorise all the accounts in various categories like Low risk, Medium Risk, High Risk, Very High risk. Most probably now your account will be placed in Very High risk category. If they will find few more transactions that may get flagged now ( does not mater if they were clear and not flagged in the past ) or have high cash deposits etc, your account is going to be blocked or closed. You will be given DD pay order which you can cash only in the bank account with same name.
2. Lol, please read 1 again. Did you noticed anywhere bank asked you to prove yourself and provide supporting evidence for transaction ? No. It all depends on how much your account is transacting. If they think that its high risk account, same as 1 will happen to you.
3. Bingo. Bingo again. You will never know what happened. The sender will also not be able to get any answer from bank and most probably he will not see his money back. For receiver everything in case 1 will happen but may be he will not loose his account, but that solely depends on what bank thinks about your account.

So what you can do to save yourself. You will have to use your rights. Ask them you want to file a police report for the same and want them to give the issue in written. If Bank is not giving you that in written, just lodge a fraud complaint with Police, its simple and easy. Once you have lodged complaint most of the things from bank will be smooth and they will try to help you for case 2 and 3.

To lodge a proper complaint you must know with whom you are transacting. You must have enough proof to show the Police and Bank that customer actually communicated with you and he wanted to send you payment via NEFT.

People here have to understand that bank account is not a piggy bank that any one can send funds in. You must know with whom you are doing business and from where funds are coming in your account.

I hope this helps.

Cheers