Framework for faster processing of Cross-Border Inward Payments
Framework for Faster Processing of Cross-Border Inward Payments
The Reserve Bank of India’s Payments Vision 2025 emphasizes improving the efficiency of international payment systems in line with the G20’s global targets, which aim to make cross-border transactions quicker, more affordable, transparent, and widely accessible.
Need for Improvement
The overall time taken for cross-border payments is influenced by multiple stages in the transaction chain. A key delay often occurs at the beneficiary bank level—specifically, the period between receiving funds and crediting them to the customer’s account.
A review of current practices has highlighted the need to simplify and accelerate procedures at this stage to ensure prompt communication and credit of funds.
Key Directions to Banks
To improve turnaround time, banks are advised to adopt the following measures:
- Immediate Customer Notification
Customers should be promptly informed as soon as an inward remittance message is received. If such messages arrive after banking hours, customers must be notified at the beginning of the next working day. - Frequent Reconciliation of Nostro Accounts
Instead of depending solely on end-of-day statements, banks should verify and reconcile inward credits in their nostro accounts on a near real-time basis or at short intervals. Ideally, this process should not be delayed beyond one hour. - Timely Credit to Beneficiaries
Payments received during foreign exchange market hours should be credited to the beneficiary’s account on the same day. Transactions received after market hours should be credited on the following business day, subject to compliance with applicable FEMA and regulatory requirements. - Adoption of Straight Through Processing (STP)
Banks may implement automated processing systems for crediting funds to resident individuals, based on internal risk assessment and regulatory compliance. - Digital Enablement for Customers
Banks are encouraged to introduce user-friendly digital platforms allowing customers to:- Submit required documents or information
- Track transaction status
- Manage foreign exchange-related activities
These guidelines will come into effect six months from the date of issuance of the circular.
This directive has been issued under the authority of the Payment and Settlement Systems Act, 2007.
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