**Executive Summary**
This circular from the Reserve Bank aims to improve the efficiency of cross-border inward payments in line with the Payments Vision 2025. It outlines guidelines for scheduled commercial banks to streamline processes for timely credit and intimation of inward transactions. The directions in paragraph 3 become effective six months from the date of the circular.
**Key Points / Main Content**
* **Customer Intimation:**
* Banks must immediately inform customers upon receipt of cross-border inward transactions.
* Messages received after operating hours should be communicated at the start of the next business day.
* **Nostro Account Reconciliation:**
* Banks should reconcile and confirm credit in nostro accounts on a near real-time basis or at periodic intervals, not exceeding thirty minutes.
* **Payment Crediting Timelines:**
* Banks should endeavor to credit inward payments received during foreign exchange market hours on the same business day.
* Payments received after market hours should be credited on the next business day, subject to FEMA and other regulatory requirements.
* **Straight-Through Processing (STP):**
* Banks, based on risk assessment and FEMA guidelines, may implement straight-through processing for crediting inward payments to resident accounts.
* **Digital Interface:**
* Banks may provide digital interfaces for customers to facilitate foreign exchange transactions, including document submission and transaction monitoring.
* **Legal Basis:**
* The directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act 2007.
**Impact Analysis**
**Scheduled Commercial Banks**
* **Impact:** Banks must adjust their internal processes and systems to comply with the new guidelines, which involves modifying reconciliation processes, customer communication protocols, and payment crediting procedures.
* **Action Required:** Banks must review and update their operational procedures to align with the new guidelines, implement necessary system upgrades, and train staff to ensure compliance within six months of the circular date.
**Customers Receiving Cross-Border Payments**
* **Impact:** Customers will benefit from faster and more transparent processing of inward payments, leading to quicker access to funds and improved service.
* **Action Required:** No direct action is required from customers. However, they may need to be informed by their banks about any new procedures or digital interfaces related to foreign exchange transactions.
Key Entities Referenced
Payments Vision 2025: A framework by the Reserve Bank aiming to improve efficiency, speed, and transparency in cross-border payments
Payment and Settlement Systems Act 2007: The Act under which the directive is issued, providing the legal basis for regulating payment and settlement systems.
FEMA: Foreign Exchange Management Act, referenced in the context of compliance requirements for crediting inward payments.
Reserve Bank: The issuing authority for the guidelines related to cross-border payments.
Scheduled Commercial Banks: The entities to whom the guidelines are addressed and who are expected to implement them.
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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