**Executive Summary**
This circular from the Reserve Bank of India provides guidelines 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. Banks are advised to streamline processes related to customer notification, reconciliation, and credit of inward payments. The directives outlined in paragraph 3 will be 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 must be communicated at the start of the next business day.
* **Reconciliation of Nostro Accounts:**
* Banks should reconcile and confirm credit in nostro accounts on a near real-time basis or at periodic intervals, not exceeding thirty minutes, to avoid relying solely on end-of-day statements.
* **Credit of Inward Payments:**
* Banks should credit inward payments received during foreign exchange market hours 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 requirements.
* **Straight Through Processing:**
* Banks may implement a straight-through process for crediting inward payments to individual resident accounts, subject to risk assessment and FEMA guidelines.
* **Digital Interface:**
* Banks should endeavor to provide a digital interface for customers to facilitate foreign exchange transactions, including document submission and monitoring.
* **Effective Date and Legal Basis:**
* The directions in paragraph 3 will be effective six months from the date of the circular.
* The directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act 2007.
**Impact Analysis**
**All Scheduled Commercial Banks**
* **Impact:** Banks must adjust their processes and systems to comply with the new guidelines, potentially requiring investment in technology and training. They will need to ensure faster and more efficient handling of cross-border inward payments.
* **Action Required:** Banks need to review and update their operational procedures, implement necessary technological changes, and train staff to adhere to the guidelines, and ensure compliance with FEMA and other regulatory requirements.
**Customers of All Scheduled Commercial Banks**
* **Impact:** Customers should experience faster credit and more timely notifications for cross-border inward payments, improving overall service quality. They may benefit from digital interfaces for foreign exchange transactions.
* **Action Required:** Customers may need to adapt to new bank processes and potentially utilize digital interfaces offered by banks for foreign exchange transactions.
Key Entities Referenced
Payments Vision 2025: A Reserve Bank initiative aiming to improve the efficiency of cross-border payments.
Payment and Settlement Systems Act 2007: The legal basis (Section 10(2) and Section 18) for the directive.
FEMA: Foreign Exchange Management Act, regulatory requirements to be compliant with.
Scheduled Commercial Banks: The entities to whom the guidelines are addressed.
G20: The directive aligns with the G20's roadmap for improving cross-border payments.
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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