RBI has issued new guidelines for credit of inward fund transfer for NEFT/RTGS/ECS Credit and debit in case of ECS Debit.
To ensure straight-through processing and quicker credit/debit and return, RBI has allowed banks to credit the incoming NEFT/RTGA/ECS solely based on the account number in the instruction. Beneficiary Banks are not required to manually match the names in the instruction with the names in the bank account. Originator/Remitter will be henceforth responsible for providing correct details of the beneficiary.
However, to ensure customers are not taken for a ride in case of any mistakes, RBI has asked all banks to put in place a robust, transparent & quick redressal system for wrong credits/debits.
What is the impact for us?
1. Quicker credit by the beneficiary banks into the accounts, most will allow STP (Straight-through Processing) that will will ensure instant credit as soon as the bank receives the credit.
2. Refunds in case of invalid account numbers will be faster as banks will be able to quickly identify these cases and initial reversal
3. As a remitter we must ensure that beneficiary account number is correct. How to do it? Unfortunately we do not have a system where we can confirm the account number from the other bank while registering a beneficiary in internet banking, so we have to be extremely careful while registering the correct account numbers.
4. Also ensure you follow-up with the beneficiary for credit of funds after you transfer. Normally for NEFT the funds will be credited based on the settlement cycle, it takes a maximum of 3-4Hours if initiated before the cut-off time prescribed by the banks. For RTGS credit should be done before 2Hours.
So in case credit is not received, beneficiary can follow up with his bank.
RBI can help in this by ensuring that all banks must share the URN of the transaction with the customers (display it in the internet banking, send by sms/email). URN will help is tracing the transaction faster than other data both at the remitter’s & beneficiary’s bank.
This new rule will come in effect from 1st January 2011.
Read the full circular here.