In a significant step to enhance customer experience, the Reserve Bank of India has directed banks to ensure same-day credit of cross-border inward remittances received during foreign exchange market hours.
The move is aimed at reducing delays and aligning India’s payment systems with global best practices.
Objective Behind the Move
The directive is part of RBI’s broader initiatives under:
- Payments Vision 2025
- G20 roadmap on cross-border payments
These frameworks aim to make international transactions:
- Faster
- Cheaper
- More transparent
- More accessible
A major issue identified was delays at the beneficiary bank level, especially between receipt of funds and final credit to customer accounts.
New Timelines for Credit of Funds
The RBI has prescribed clear timelines:
- During forex market hours → Credit on the same business day
- After market hours → Credit on the next working day
All transactions will remain subject to compliance with FEMA regulations.
Mandatory Customer Notifications
To improve transparency, banks must:
- Immediately notify customers upon receiving inward remittance messages
- If received after banking hours → Notify at the start of the next working day
This ensures customers are kept informed in real time.
Addressing Operational Inefficiencies
The RBI highlighted that many banks rely on:
- End-of-day nostro account reconciliation, causing delays
New Instructions:
- Shift towards near real-time reconciliation
- Conduct checks at frequent intervals (ideally within one hour)
This is expected to significantly speed up processing times.
Adoption of STP Systems
Banks have been encouraged to implement:
- Straight-Through Processing (STP) systems
Benefits:
- Automated transaction processing
- Minimal manual intervention
- Faster credit to beneficiary accounts
- Reduced operational bottlenecks
Technology Upgradation Measures
Banks are required to strengthen their digital infrastructure by:
- Developing customer-facing digital platforms
- Enabling:
- Real-time tracking of remittances
- Document submission online
- Transaction status monitoring
Implementation Timeline
- The new guidelines will come into effect within six months from issuance
- Issued under the Payment and Settlement Systems Act, 2007
Significance of the Move
- Improves speed and efficiency of cross-border payments
- Enhances transparency and customer trust
- Benefits individuals and businesses receiving overseas funds
- Supports India’s growing role in the global financial ecosystem
Conclusion
With rising cross-border inflows, including remittances and business payments, the RBI’s directive marks a crucial reform. By enforcing same-day credit, real-time processing, and better communication, the central bank is strengthening India’s payment infrastructure and ensuring a more seamless experience for users.