**Executive Summary**
This document outlines guidelines from the Reserve Bank for all scheduled commercial banks to facilitate faster cross-border inward payments, aligning with the Payments Vision 2025 and the G20 roadmap. Banks are advised to streamline processes to ensure timely customer notification and credit of payments. The directions in paragraph 3 become effective six months from the date of the circular.
**Key Points / Main Content**
* **Customer Notification:**
* Banks must inform customers of received cross-border inward transactions immediately upon receiving the inward message.
* For messages received after operating hours, customers should be informed at the start of the next business day.
* **Nostro Account Reconciliation:**
* Banks should reconcile and confirm credit in their nostro accounts on a near real-time basis or at periodic intervals, ideally not exceeding thirty minutes, to avoid delayed credit.
* **Payment Crediting:**
* 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 compliance.
* **Straight Through Processing:**
* Banks may implement a straight-through process for crediting inward payments to resident accounts, based on risk assessment and FEMA compliance.
* **Digital Interface:**
* Banks may endeavor to provide a digital interface for customers to facilitate foreign exchange transactions, including document submission and transaction monitoring.
* **Legal Basis and Effective Date:**
* The directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act 2007.
* The directions at para 3 shall be effective six months from the date of this circular.
**Impact Analysis**
**All Scheduled Commercial Banks**
* **Impact**
* Required to update and streamline internal processes for handling cross-border inward payments to comply with the new guidelines.
* May need to invest in technology or adjust existing systems to achieve faster reconciliation and customer notification.
* **Action Required**
* Review and update internal procedures for cross-border inward payments processing.
* Implement faster reconciliation processes for nostro accounts.
* Ensure timely notification to customers regarding received payments.
* Consider offering a digital interface for customers to facilitate foreign exchange transactions.
**Customers Receiving Cross-Border Payments**
* **Impact**
* Expected to receive faster notification of inward payments and quicker crediting of funds to their accounts.
* May benefit from enhanced digital interfaces for managing foreign exchange transactions.
* **Action Required**
* Monitor payment receipts to ensure banks are adhering to the new guidelines.
* Utilize available digital interfaces for foreign exchange transactions.
Key Entities Referenced
Payments Vision 2025: Aims to bring efficiency in cross-border payments aligning with the G20 roadmap.
Payment and Settlement Systems Act 2007: The Act under which the directive is issued, specifically Section 10(2) read with Section 18.
FEMA: Foreign Exchange Management Act; banks must comply with FEMA guidelines when crediting inward payments.
Scheduled Commercial Banks: The entities to which the guidelines on faster cross-border payments are addressed.
G20: Cross-border payments should align with the roadmap set by the G20.
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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