**Executive Summary**
This document provides guidelines from the Reserve Bank to all Scheduled Commercial Banks to facilitate faster cross-border inward payments, aligning with the Reserve Bank’s Payments Vision 2025 and the G20 roadmap. Key directives focus on timely customer notification, reconciliation processes, and crediting payments promptly. The directions outlined in paragraph 3 become effective six months from the circular's date.
**Key Points / Main Content**
* **Customer Notification:**
* Banks must inform customers immediately upon receiving a cross-border inward transaction message.
* Messages received after operating hours should be communicated at the start of the next business day.
* **Reconciliation and Credit:**
* Banks are advised to reconcile and confirm nostro account credits on a near real-time basis or at periodic intervals, not exceeding 30 minutes.
* Banks should credit inward payments received during foreign exchange market hours on the same business day, and payments received after market hours on the next business day, subject to compliance with FEMA and other regulations.
* **Straight-Through Processing & Digital Interface:**
* Banks, based on risk assessment and FEMA compliance, may implement straight-through processing for crediting inward payments to individual residents' accounts.
* Banks should endeavor to provide a digital interface for customers to facilitate foreign exchange transactions.
* **Authority & Effective Date:**
* The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007.
* The directions outlined in paragraph 3 become effective six months from the date of this circular.
**Impact Analysis**
**Scheduled Commercial Banks**
* **Impact:**
* Need to adjust operational processes to align with the new guidelines for faster reconciliation, customer notification, and payment crediting.
* May need to invest in technology and infrastructure to facilitate straight-through processing and digital interfaces.
* Increased compliance burden regarding FEMA guidelines and risk assessment.
* **Action Required:**
* Review and update internal procedures for cross-border inward payments.
* Implement systems for immediate customer notification of inward transactions.
* Enhance reconciliation processes for nostro accounts, aiming for near real-time processing.
* Ensure compliance with FEMA regulations for straight-through processing.
* Develop or improve digital interfaces for customers.
**Customers Receiving Cross-Border Payments**
* **Impact:**
* Faster notification of inward payments.
* Potentially faster crediting of funds to their accounts.
* Improved access to information and monitoring of foreign exchange transactions through digital interfaces.
* **Action Required:**
* Familiarize themselves with the bank's updated procedures for cross-border payments.
* Utilize the available digital interfaces for tracking and managing foreign exchange transactions.
Key Entities Referenced
Payment and Settlement Systems Act 2007: Act authorizing the directive related to cross-border inward payments.
Payments Vision 2025: Reserve Bank's vision document that aims to bring efficiency in the cross-border payments.
FEMA: Guidelines banks must comply with while processing inward payments.
Scheduled Commercial Banks: The directive applies to all scheduled commercial banks.
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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