**Executive Summary**
This document contains guidelines from the Reserve Bank to Scheduled Commercial Banks regarding faster cross-border inward payments to align with the Reserve Bank's Payments Vision 2025, which aims to improve the efficiency of cross-border payments. Banks are directed to take specific actions to streamline processes and ensure timely credit of inward payments to beneficiary accounts. The guidelines in paragraph 3 are effective six months from the date of the circular.
**Key Points / Main Content**
* **Customer Communication:**
* Banks must inform customers of cross-border inward transactions immediately upon receiving the inward message. Messages received after operating hours should be communicated at the start of the next business day.
* **Nostro Account Reconciliation:**
* Banks should reconcile and confirm credits in nostro accounts on a near real-time basis or at periodic intervals, not exceeding thirty minutes, to avoid delayed credit.
* **Payment Crediting:**
* Inward payments received during foreign exchange market hours should be credited to the beneficiary's account on the same business day. Payments received after market hours should be credited on the next business day, subject to FEMA and other regulatory compliance.
* **Straight Through Processing:**
* Based on risk assessment and FEMA guidelines, banks can implement straight-through processing for crediting inward payments to individual resident accounts.
* **Digital Interface:**
* Banks should endeavor to provide a digital interface for customers to facilitate foreign exchange transactions, including document submission and monitoring.
* **Legal Basis:**
* The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).
**Impact Analysis**
**Stakeholder: Scheduled Commercial Banks**
* **Impact:** Banks must modify their processes for handling cross-border inward payments to comply with the new guidelines, potentially requiring system upgrades and procedural changes.
* **Action Required:** Banks must implement the measures outlined in the circular, including improving customer communication, expediting nostro account reconciliation, and ensuring timely crediting of payments, to be compliant in six months.
**Stakeholder: Customers of Scheduled Commercial Banks (Beneficiaries of Inward Payments)**
* **Impact:** Customers will benefit from faster notification of inward payments and quicker crediting of funds to their accounts.
* **Action Required:** No direct action is required from customers; they should expect improved service from their banks regarding cross-border inward payments.
Key Entities Referenced
Payments Vision 2025: Aims to bring efficiency in cross-border payments.
Payment and Settlement Systems Act 2007: Act 51 of 2007; cited as the legal basis for the directive.
FEMA: Foreign Exchange Management Act; compliance is required for crediting inward payments.
Reserve Bank: The circular is issued by the Reserve Bank, outlining guidelines for banks.
G20: Roadmap to make cross-border payments cheaper, faster, more transparent, and more accessible
DPSS.CO.ID.No / 06.08.017 / 2025-26 DD-MM-YYYY
The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks
Madam / Dear Sir,
Guidelines to facilitate faster cross-border inward payments
The Reserve Bank’s Payments Vision 2025 aims to bring efficiency in the cross-border
payments aligning with the G20 roadmap to make them cheaper, faster, more
transparent, and more accessible.
2. The speed of cross-border payments is affected by several factors. One of
these factors is the delay at the beneficiary leg i.e., the time taken from receipt of the
payment at the beneficiary bank till credit to the beneficiary account. Streamlining the
processes at the beneficiary bank would ensure timely intimation of payment
information and credit to the beneficiary’s account.
3. Accordingly, banks are advised as under:
a. Banks shall inform their customer of the receipt of cross-border inward
transactions immediately on receipt of inward message. Messages received
after close of operating hours of the individual banks shall be informed to the
customer immediately at the start of the next business day.
b. It is observed that several banks rely upon end-of-day statements of the nostro
account for confirming and reconciling receipts in nostro accounts, resulting in
delayed credit. To expedite this process, banks are advised to undertake
reconciliation and confirmation of credit in the nostro account either on near real
time basis or at periodic intervals. The reconciliation interval should normally not
exceed thirty minutes.
c. Banks shall endeavour to credit the inward payments received during the
foreign exchange market hours within the same business day to the
beneficiary’s account, and credit the inward payments received after market
hours on the next business day, subject to compliance with the extant FEMA
and other regulatory requirements.d. Banks may, based on their risk assessment and subject to compliance with
extant FEMA guidelines, put in place a straight through process for crediting
inward payments to the account of individual residents.
e. Banks may, within a reasonable time frame, endeavour to provide digital
interface to their customers to facilitate foreign exchange transactions, including
submission of documents or information, and monitoring of transactions.
4. The directions at para 3 above shall be effective six months from the date of
this circular.
5. The directive is issued under Section 10(2) read with Section 18 of Payment
and Settlement Systems Act 2007, (Act 51 of 2007).
Yours faithfully,
(Gunveer Singh)
Chief General Manager-in-Charge
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