**Executive Summary**
This circular from the Reserve Bank provides guidelines to 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 intimation of payment information and credit to the beneficiary's account. The directives outlined in paragraph 3 of the circular will take effect six months from the date of the circular.
**Key Points / Main Content**
* **Customer Communication:**
* Banks must inform customers immediately upon receipt of cross-border inward transactions.
* For messages received after operating hours, banks must inform customers immediately at the start of the next business day.
* **Reconciliation and Credit:**
* Banks should reconcile nostro accounts on a near real-time basis or at periodic intervals, not exceeding thirty minutes, to expedite the confirmation of credit.
* Banks shall endeavor to 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 FEMA and other regulatory requirements.
* **Payment Processing:**
* Banks may, based on risk assessment and compliance with FEMA guidelines, implement straight-through processing for crediting inward payments to resident accounts.
* **Digital Interface:**
* Banks may, within a reasonable timeframe, endeavor to provide a digital interface to customers for foreign exchange transactions, including document submission and transaction monitoring.
* **Effective Date:**
* The directions outlined in paragraph 3 will be effective six months from the date of the circular.
**Impact Analysis**
**Scheduled Commercial Banks**
* **Impact:** Banks must modify their internal processes for handling cross-border inward payments to meet the new guidelines, including customer communication, reconciliation procedures, and payment crediting timelines. They should also consider offering digital interfaces for foreign exchange transactions.
* **Action Required:** Banks must review and update their operational procedures and systems to comply with the guidelines and ensure timely and efficient processing of cross-border inward payments.
**Customers Receiving Cross-Border Payments**
* **Impact:** Customers will receive quicker notifications and crediting of cross-border inward payments, improving efficiency and transparency.
* **Action Required:** Customers may be required to provide necessary information and documentation through the new digital interfaces provided by the banks to facilitate foreign exchange transactions.
Key Entities Referenced
Payment and Settlement Systems Act 2007: Act 51 of 2007, the legal basis for the directive on cross-border inward payments.
Payments Vision 2025: The Reserve Bank's vision document aiming for efficient cross-border payments.
FEMA: Foreign Exchange Management Act guidelines, with which banks need to comply when crediting inward payments.
Reserve Bank: The issuing regulator for the guidelines on cross-border inward payments.
G20 roadmap: International roadmap to make cross-border payments cheaper, faster, more transparent, and more accessible.
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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