RBI Proposes Same-Day Credit for Cross-Border Payments

The Reserve Bank of India (RBI) has proposed a series of measures aimed at streamlining and accelerating cross-border payments, targeting both individuals and businesses who receive funds from abroad. The initiative seeks to address delays that commonly occur between the time a bank receives incoming remittances and the time the recipient’s account is credited. In its draft circular, the central bank outlined new guidelines requiring banks to credit inward remittances 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.

The RBI highlighted that one of the main challenges with cross-border payment speed is the lag between when a bank receives the funds and when these are reflected in the beneficiary’s account. To address this, the regulator recommended that banks adopt straight-through automated systems to directly credit inward payments after conducting necessary risk assessments. Such automation would reduce manual intervention, minimize errors, and expedite fund availability for end-users. Additionally, banks are encouraged to establish digital platforms where customers can upload documents and track the status of their foreign exchange transactions in real time.

The circular emphasized the importance of timely communication with customers. Banks should immediately notify recipients upon receiving messages about incoming cross-border transactions. Messages received after operational hours should be communicated to customers at the start of the next business day. This will ensure transparency and keep customers informed, enhancing trust in the banking system.

The RBI also noted that many banks still depend on end-of-day nostro account statements to verify and reconcile incoming payments, which often causes delays in crediting beneficiaries’ accounts. To accelerate the process, banks are advised to perform reconciliation and confirmation of credits in nostro accounts on a near real-time basis or at regular intervals not exceeding thirty minutes. This approach will significantly reduce the time taken to reflect cross-border payments in customers’ accounts.

Furthermore, the RBI recommended that banks develop digital interfaces for customers, enabling a seamless experience for foreign exchange transactions. These platforms should allow customers to submit required documents, exchange necessary information, and monitor transaction progress in real time. By doing so, the RBI aims to modernize the user experience and bring banking services in line with digital age expectations.

This move forms part of the RBI’s broader strategy to modernize India’s cross-border payment ecosystem. The goal is to enhance operational efficiency, minimize friction in fund flows, and ensure the Indian banking system aligns with global best practices in terms of speed, transparency, and reliability. By enabling near real-time credit for cross-border transactions, the RBI aims to support both businesses and individuals who rely on timely international payments for commercial and personal purposes.

Overall, the RBI’s proposed measures reflect a comprehensive approach to transforming cross-border payments in India. The adoption of automated systems, real-time reconciliation, and digital platforms is expected to reduce delays, improve customer satisfaction, and enhance trust in the banking system. The initiative represents a significant step towards aligning India’s financial ecosystem with international standards, ensuring faster, safer, and more transparent cross-border fund transfers while fostering greater efficiency and competitiveness in the domestic banking sector.