**Executive Summary**
This document provides guidelines to all scheduled commercial banks to facilitate faster cross-border inward payments in alignment with the Reserve Bank's Payments Vision 2025 and the G20 roadmap. It focuses on streamlining processes at the beneficiary bank to ensure timely credit and intimation of payment information. The directions in paragraph 3 are effective six months from the date of the circular.
**Key Points / Main Content**
* **Customer Notification:**
* Banks must inform customers of cross-border inward transactions immediately upon receipt of the inward message.
* Messages received after operating hours should be communicated at the start of the next business day.
* **Reconciliation of Nostro Accounts:**
* Banks are advised to reconcile and confirm credit in nostro accounts on a near real-time basis or at periodic intervals.
* The reconciliation interval should typically not exceed thirty minutes.
* **Credit Timelines:**
* Banks should endeavour to credit inward payments received during foreign exchange market hours on the same business day.
* Inward 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 may implement straight-through processing for crediting inward payments to residents' accounts.
* **Digital Interface:**
* Banks may endeavour to provide a digital interface for customers to facilitate foreign exchange transactions, including document submission and monitoring.
* **Legal Basis and Effective Date:**
* The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007.
* The directions at para 3 above shall be effective six months from the date of this circular.
**Impact Analysis**
**All Scheduled Commercial Banks**
* **Impact:** Required to modify internal processes to align with the new guidelines, including customer notification procedures, nostro account reconciliation practices, and credit timelines. May need to implement straight-through processing and digital interfaces.
* **Action Required:** Review and update internal procedures to comply with the guidelines. Implement changes to customer notification and nostro account reconciliation.
**Customers (Beneficiaries of Inward Payments)**
* **Impact:** Benefit from faster notification and crediting of cross-border inward payments. Potential for improved transparency and accessibility of foreign exchange transactions.
* **Action Required:** Monitor accounts for timely crediting of funds. May need to utilize new digital interfaces provided by banks for transaction monitoring.
Key Entities Referenced
Payments Vision 2025: Aims to improve efficiency in cross-border payments, aligning with the G20 roadmap.
Payment and Settlement Systems Act 2007: The legal basis for the directive regarding cross-border inward payments (specifically Section 10(2) read with Section 18).
FEMA: Foreign Exchange Management Act, which banks must comply with when processing cross-border inward payments.
Scheduled Commercial Banks: Entities to whom the guidelines regarding faster cross-border inward payments are addressed.
G20: Referenced as the roadmap to make cross-border payments cheaper, faster, more transparent, and more accessible aligning with Payments Vision 2025.
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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