To bring in more efficiency in cross-border payments, the Reserve Bank of India has asked banks to make near real-time notification to customers about their inward transactions immediately on receipt of inward message.
The RBI on Thursday issued new circular on cross-border payments aligning them with the G20 road map that has set targets for achieving cheaper, faster, more transparent, and more accessible cross-border payments.
Noting that the speed of the cross-border payments is affected by several factors, the RBI under its ‘Payments Vision’ plans said one of the challenges with speed of payments is experienced at the beneficiary leg that’s the time taken from receipt of the payment at the beneficiary bank till credit to the beneficiary account.
The slew of changes, which will become effective six months from now comes after a review of the extant process for inward cross-border payments, which indicated the need for streamlining the processes at the beneficiary bank to ensure timely intimation of payment information and credit to the beneficiary account.
“Banks shall inform their customers of the receipts of cross-border inward transactions immediately on receipt of inward messages. Messages received after close of operating hours of banks shall be informed to customer immediately at the start of the next business day,” RBI said in a notification Thursday.
Since several banks rely on end-of-day statements of the nostro accounts to confirm and reconcile receipts in such accounts, the regulator found that this was leading to delays in crediting funds to the beneficiary account.
Nostro accounts are foreign bank accounts used by domestic banks to facilitate international transactions in foreign currencies.
To expedite this process, RBI said: “Banks are advised to undertake reconciliation and confirmation of credit in the nostro account frequently either on near real-time basis or at periodic intervals. The reconciliation interval should normally not exceed one hour.”
It further said that banks should try to credit the inward payments received during the forex market hours within the same business day to the beneficiary 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.”
Banks are also allowed to provide digital interface to their customers to facilitate forex transactions, including submission of documents or information, and monitoring of transactions.