The Reserve Bank of India has issued comprehensive guidelines to facilitate faster cross-border inward payments, in line with its Payments Vision 2025 and the global roadmap endorsed by the G20 for making cross-border payments cheaper, faster, more transparent, and more accessible.
Cross-border inward payments often face delays, particularly at the beneficiary stage. A key challenge lies in the time taken between the receipt of funds by the beneficiary bank and the eventual credit to the customer’s account. Recognizing this bottleneck, the Reserve Bank reviewed existing processes and identified the need for streamlining operations at the beneficiary bank level to enhance efficiency and reduce delays.
To address these issues, banks have been directed to implement several measures. Firstly, banks must immediately inform customers upon receipt of inward cross-border payment messages. In cases where such messages are received after banking hours, customers should be notified at the start of the next business day. This ensures timely communication and transparency for customers awaiting funds.
Secondly, banks have been advised to improve reconciliation practices related to their nostro accounts. Traditionally, many banks rely on end-of-day statements for reconciliation, which can delay fund credit. To overcome this, banks should adopt near real-time or frequent reconciliation processes, ensuring that the interval does not exceed one hour. This step is expected to significantly reduce processing delays.
Further, banks are encouraged to credit inward payments received during foreign exchange market hours on the same business day, while payments received after market hours should be credited on the next business day, subject to compliance with applicable FEMA and regulatory requirements. This introduces a clear timeline for fund credit, enhancing predictability for customers.
Additionally, banks may implement straight-through processing (STP) for crediting inward payments to individual resident accounts, based on their internal risk assessment and in compliance with FEMA guidelines. This automation can further streamline operations and minimize manual intervention.
Banks are also encouraged to develop digital interfaces that allow customers to submit documents, provide information, and track their foreign exchange transactions seamlessly. This will improve customer experience and operational efficiency.
These directions will come into effect six months from the date of issuance of the circular. The guidelines have been issued under the powers conferred by the Payment and Settlement Systems Act, 2007, reinforcing the regulatory commitment to improving cross-border payment systems in India.
