RTGS / NEFT / NECS / ECS - Delays in affording credits and / or return of transactions by member banks

 RTGS / NEFT / NECS / ECS - Delays in affording credits and / or return of transactions by member banks

Today, RBI, DPSS has issued a follow-up Notification, emphasizing the need for Banks to adhere to the procedural guidelines, with respect to Credits through

1)   RTGS 

2)   NEFT 

3)   ECS 

4)   NECS

AND also

1) Return of transactions by member banks

The circular no is RBI/2010-11/155 DPSS (CO) EEPD No. 282 / 04.03.01 / 2010-11 dt.  August 5, 2010, addressed to The Chairman and Managing Director / Chief Executive Officer of member banks participating in RTGS / NEFT / NECS / ECS

The full Notification is @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5927&Mode=0

Why was this Notification required?

a)      Increase in number of complaints by the Bank’s customers to Reserve Bank of India.

b)    The need to maintain credibility of RTGS / NEFT / NECS / ECS Schemes

Is any action required by the Bank customers, to ensure that the credit reaches the Beneficiary in time.

Yes, the remitting customers need to ascertain the complete details of the Beneficiaries’, before they request their bankers to execute the RTGS/NEFT transactions.

a)      Beneficiary Account No

b)      Beneficiary Account Holder Name

c)      Beneficiary Bank

d)     Beneficiary IFSC

Nothing more, nothing less.

Tit-Bit - Wipro Finds $4 Million Fraud by Employee-The spill over effect

Wipro Finds $4 Million Fraud by Employee-The spill over effect.

It is common knowledge by now that a $4 Million Fraud has been discovered by Wipro in their books.

Right now, there is very little public information about the modus-operandi or the number of employees involved or the time period.

Of course, it is understandable that Wipro would not like to disclose more about this incident. Otherwise, this might encourage a similar type of incidents in other Organisations too.

Like it or not, today’s world is driven by computers, with the LOGIN ID and PASSWORDS being omnipresent.

Hence, in any Organization, it is important that adequate care be taken with LOGIN ID and PASSWORDS.

It is important to note that the fraud was committed in a IT Organization and not a Financial Institution.

I am not going into the

01) The modus operandi of this incident.

02) What Wipro need have done, to prevent such an incident?

There are far more competent people than me, to address the above issues.

What I am interested is what can be done to prevent such incidents in any Organization, be it IT, Finance, Oil, etc.

There are a large number of companies in this world, whose Balance Sheet is equal/more than Wipro’s.

This means such incidents can occur in any Organization, as long as the crooks find easy money.

What is NOT the Solution:-

01) Educating employees that sharing of Login Id’s and Passwords is wrong.

Let us accept the fact that in today’s environment, sharing of Login ID’s and Passwords is the rule, rather than the exception.

Than what is the Solution:-

In my view, the following measures will reduce the number of fraudulent incidents.

Critics might say that lots of money is involved in the measures, but than if the Money spent is less than the potential loss, it is better to spend the money.

01) Have a minimum number of Applications/Software Programs, which have access to the Organization’s monies.

I know an institution, in which the users for their routine operation had to remember 17 Login Id’s and the corresponding passwords!!

So you cannot blame the users for having a single login id and password for all the 17 Applications/Software Programs.

02)         All the routine Applications/Software Programs are linked to the HR Applications/Software Program.

The process flow could be as follows:

a)     Employee logs into the HR Application.

b)    On sign in HR Application,(attendance register) the access to all other Applications should be activated.

c)     In case of meetings or other work during the office timings, if the employee has to be away from his desk, he will log into the HR Application, and tick the Out of Desk option.  This should block access to all the other Applications, till the employee, unticks the Out of Desk option in the HR Application.

d)     When an employee is on leave, the same should be updated in the HR Application, and during the leave period, access to all other Applications is to be blocked.

This means HR Application will be the all-pervading Application in the Organization.

In fact this can be new business opportunity for IT Companies.

Display of information for lodging of ATM related complaints.

Display of information for lodging of ATM related complaints.

Every day, Banks are adding new ATM's to their Networks, to enable their customers to transact through them.
It is observed that there is a proportinate increase in the ATM Complaints too.

In India, ATM's are still used chiefly for Cash Withdrawals only.

Hence, the majority of ATM related complaints are regarding 01) non-dispensing of Cash, even though Account is debited with the amount. 02) Withholding of ATM Card by the ATM Machine, when a wrong Password is keyed in 3 times.

There was no proper display of Phone numbers/contact mechanism detials at the ATM's to enable the customers to lodge the complaints. This in turn led to customers lodging complaints with Reserve Bank of India.

To minimise complaints directly being lodged with Reserve Bank of India, RBI, DPSS has vide Notification -
RBI/2009-2010/266/DPSS No.1316 /02.10.02/2009-2010, dt.December 18, 2009, addressed to The Chairman and Managing Director / Chief Executive Officers- All Scheduled Commercial Banks including RRBs /Urban Co –operative Banks / State Co-operative Banks /District Central Co-operative Banks//ATM network providers, has provided a format for Display of information for lodging of ATM related complaints.

The said Notification can be accessed at
http://rbi.org.in/scripts/NotificationUser.aspx?Id=5429&Mode=0.

The Display should contain:

QUOTE:

   1.  Information that complaints should be lodged at the branches  where customers maintain account to which ATM card is linked

   2. Telephone numbers of help desk/contact persons of the ATM owning bank  to lodge complaint / seek assistance

UNQUOTE:

Frequently Asked Questions(FAQ's) on Speed Clearing.

Frequently Asked Questions(FAQ's) on Speed Clearing.

Reserve Bank of India, has recently released the latest Frequently Asked Questions(FAQ's) on Speed Clearing.

The  Frequently Asked Questions(FAQ's), are comprehensive and simple to understand.

Hence, I will not attempt to re-invent the Wheel.

The Frequently Asked Questions(FAQ's) on Speed Clearing, can be accessed @
http://rbi.org.in/scripts/FAQView.aspx?Id=72

However, I wish to mention a few points, for faster realization of  your Cheques.

01) Ensure that the cheques issued in your favor are in the same style as the title of your bank account.
For eg: My name in my Bank Account is Nayakanti Prashant, hence, in all the cheques I take, I ensure that the Payee Name is written as  ''Nayakanti Prashant''.

02) Ensure that your bank account number is mentioned next to your name on the cheque.

This minimizes the chances of fraudulent alteration of the Payees name on the cheque, in case it is misplaced/lost

Eg: Pay  Nayakanti Prashant a/c 556010008350

Of course, the best way to receive funds in lieu of cheques are RTGS/NEFT. However, this might not be possible, when a Post-dated cheque is part of the transaction.

RTGS System – Mandatory Beneficiary Account Number

There has been a fantastic jump in RTGS Transactions since January 2009, in our country.

The figures below  are proof of the same.

RTGS - India
	Total Volumes
Jan-09	1,436,951
Oct-09	2,925,034
Total Jump	1,488,083
% Jump	104

To make RTGS Transactions more user friendly and more importantly, customer-friendly, Reserve Bank of India, Department of Payments and Systems, have introduced a series of Safety/Additional Features in RTGS messages.

Towards this end, Reserve Bank of India, vide Lr.No. RBI/2009-10/215
DPSS (CO) RTGS No.949/ 04.04.002 / 2009 – 2010 dt. November 11, 2009, addressed to Chairman and Managing Director / Chief Executive Officer of all banks participating in RTGS, has made it mandatory to include the Beneficiary Account Number in R41 i.e Customer RTGS Message.

The complete notification can be viewed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5359&Mode=0

The highlights of the Notification are:

01) No RTGS participant would be able to originate a R41 message without beneficiary account number filled in the line 1 of field tag 5561.

02)  Line 1(account number field) would be alpha-numeric and would not allow special characters and spaces in between.

03) The Notification will be effective from the date on receipt of the requisite IT Patch for PI (Participant Interface), by Reserve Bank of India.

Field tag 5561
Line 1	Account number	[/34X]
Line 2	Name of the Beneficiary	35X
Line 3, 4 and 5	Address and Place of Residence	3*35X

Meanwhile, Banks have to

01)                      Ensure that all their account numbers adhere to the new routing rules i.e Numeric/Alpha Numeric/No special characters or spaces in between.

02)                     Ensure that checks are in-built in their interface software to RBI, to ensure that all their R41 messages contain the Beneficiary Account Number.

03)                     Educate the RTGS users within the Bank, about the applicability of the new rule.

The above notification, will aid in R41 Transactions to move effortlessly in STP (Straight-Thru-Processing) environment. This will result in quicker credit to Customers Accounts, which in turn will boost the Banks CASA.

As more and more R41 Transactions move to the STP, the transaction processing cost too will reduce automatically.

ePayments=High CASA=High CASA=Profits for the Bank. Profits for the Bank=Large Dividend Payout=Large Dividend Payout=Higher Share Price.

Financial Inclusion: The need for out-of-box thinking.

Financial Inclusion: The need for out-of-box thinking.

What is Financial Inclusion:

Financial Inclusion is the delivery of banking services at affordable costs to vast sections of disadvantaged and low income groups. 

-

Dr. K.C.Chakrabarty, Deputy Governor, Reserve Bank of India, at the  Seminar  20th SKOCH Summit 2009, Mumbai on July 17, 2009, has defined Financial Inclusion as

        “The process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream Institutional players.”

Towards achieving FI, RBI has taken up numerous steps.

No-frills account, is seen as a major contributor by RBI, in its goal of FI.

The concept of ‘NO-FRILLS’ ACCOUNT, was first mooted by RBI in its Mid-term Review of Annual Policy Statement for the year 2005-06.

The first letter on this subject by RBI, is Lr.No. RBI/2005-06/204
DBOD.No.Leg.BC. 44/09.07.005/2005-06, November 11, 2005, addressed to All Scheduled Commercial Banks(Excluding RRBs).

Subsequently a similar letter was addressed to RRB’s and UCB’s also.

In RBI’s view, ‘NO-FRILLS’ ACCOUNT  is

QUOTE

basic banking 'no-frills' account either with 'nil' or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population. The nature and number of transactions in such accounts could be restricted, but made known to the customer in advance in a transparent manner. All banks are advised to give wide publicity to the facility of such a 'no-frills' account including on their web sites indicating the facilities and charges in a transparent manner.

UNQUOTE.

Wisely RBI has left it to the banks, to decide the minimum balances/fees/facilites to such ‘NO-FRILLS’ ACCOUNT .

However, it has advised Banks to report quarterly, the opening of such ‘NO-FRILLS’ ACCOUNT ’s

Common Points regarding ‘NO-FRILLS’ ACCOUNT ’s

However, while opening such accounts the customer should be made aware that if at any point of time, the balance in all his/her accounts with the bank (taken together) exceeds Rs.50,000/- or total credits in the accounts exceed Rs.1.00 lakh in a year, no further transaction will be permitted in the account until full KYC procedure in regard to verification of identity and address of the customer through the documents as specified are complied with.

IT Software is available to

n     Throw Alerts when the Balance in all the accounts of the customer in the Bank exceed Rs.40000/-. The Software is customizable.

n     Rejects any Credits(Transfer/Clearing/RTGS/NEFT), when the credits exceed Rs1lakh in a year.

The issue is of the cost of the Software.

Universal Observations about ‘NO-FRILLS’ ACCOUNT

01)                      The ‘NO-FRILLS’ ACCOUNT numbers are not impressive.

02)                     Also, in the ‘NO-FRILLS’ ACCOUNT opened so far, only a few accounts are active.

03)                     A decent Average Balance in the ‘NO-FRILLS’ ACCOUNT is due to balances in 20% of the ‘NO-FRILLS’ ACCOUNT. YES, the 80/20 funda, works here also.

Banks have been reluctant to encourage ‘NO-FRILLS’ ACCOUNT, due to the costs involved in Sourcing/Monitoring.

May be it is time, to offer Incentives to Banks to encourage them to open ‘NO-FRILLS’ ACCOUNT.

What could be the incentives and who has to offer them?

Well, the incentives have to be offered by Reserve Bank of India.

What could be the incentives?

1 BRANCH LICENCE SANCTION ANYWHERE IN INDIA, FOR EVERY 1 LAC ‘NO-FRILLS’ ACCOUNT, OPENED EVERY FINANCIAL YEAR.

What are the safeguards, to ensure only quality ‘NO-FRILLS’ ACCOUNT are opened.

n     A minimum of  5 transactions in a 6 month cycle i.e Half year ending 31^st March and 30^th September

n     Accounts closed within 1 year of opening, to be less than 10%.

Few Links to various Bank’s ‘NO-FRILLS’ ACCOUNT ’s offerings.

Please note that I am not canvassing for any bank, I am only interested in ePayments

http://www.icicibank.com/Pfsuser/icicibank/depositproducts/nofrillsaccount/nf_faq.htm

http://www.standardchartered.co.in/personal/accounts/en/no-frills-acc.html

http://www.hdfcbank.com/personal/accounts/savings_accounts/no_frills_account/nofrills_acc.html

http://www.iob.in/No_Frills_Account.aspx

http://www.axisbank.com/personal/accounts/azaadinofrills/Azaadi-No-Frills.asp

http://www.federalbank.co.in/content/DisplayContentDetails.aspx?id=645

http://www.barclays.in/consumer_banking/no_frills_ac.htm

http://www.chinatrustindia.com/frill.html

http://www.yesbank.in/savings_nofrillsaccount.htm

http://www.ucobank.com/deposit.htm

http://www.indorebank.org/nofrills.htm

http://www.online.citibank.co.in/portal/newgen/seo/banking/citigold/no_frills_account.htm

http://www.kotak.com/Kotak_BankSite/personal/deposits/sa_easy.htm

http://www.saraswatbank.com/view_section.jsp?lang=0&id=0,4,6,104

http://www.kvb.co.in/scripts/Common.asp?Page=nofrillcontent.asp

http://www.tmb.in/d_janatha.htm

http://www.lvbank.com/nofrills.aspx

http://www.csb.co.in/asp/0100text.asp?pageId=135&headId=135

http://www.allahabadbank.com/5-banking.asp

http://www.jkbank.net/customerSaveDepositSchemes.php

http://www.bankofindia.com/nofrill.aspx

http://www.abnamro.co.in/India/May-I-Help/Service-Ch/No-Frills/SOB-NOFRILLS.pdf

http://www.corpbank.com/asp/0100text.asp?presentID=392&headID=0

http://www.unitedbankofindia.com/deposit-schemes.asp#UnitedBasicSBAccount

http://www.bankofrajasthan.com/bor/wcms/en/home/personal-banking/deposits/accounts/small.html

http://www.statebankofmysore.co.in/downloads/depacs-bcsbi.pdf

https://www.obcindia.co.in/obcnew/site/inner.aspx?status=2&menu_id=28

http://www.canarabank.com/english/Scripts/DepositAccounts.aspx

http://www.bankofmaharashtra.in/whats_new.asp

‘NO-FRILLS’ Account’s, can improve the ePayments turnover of the Bank, as a Bank Account is mandatory to receive ePayments.

Nature’s Fury-Karnataka and Andhra Pradesh

Nature’s Fury-Karnataka and Andhra Pradesh

In the last one month, floods have hit many parts of Karnataka and Andhra Pradesh, leading to wide-scale destruction.

Media Houses, NGO’s, Government of Andhra Pradesh and Karnataka, have appealed to the public to donate in cheques/demand drafts or in kind, to aid the relief efforts. And, as usual, the public have responded overwhelmingly.

It is observed that the majority have requested the public to donate through Cheque/Demand Draft.

Government of Andhra Pradesh has also provided a Payment Gateway, for donations through Credit Cards and also provided details for Wire Transfer’s from abroad.

However, no organization has thought of the POS Terminals as a Donation Tool.
http://prashantnepayments.blogspot.com/2009/09/pos-terminals-aid-to-impulse-donations.html

Few Organizations, have had the fore-thought to provide IFSC Details for donations through NEFT.

Eg:- Eenaudu Relief Fund.

Kudos to the Eenadu Team-Members, for this brilliant idea.

As can be seen, only 4 fields are required for a successfully NEFT Transaction

01) Beneficiary Name

02) Beneficiary Account Number

03) Beneficiary Bank Branch Name

04) IFSC of Beneficiary Bank Branch Name

Nothing more, nothing less.

Donations through NEFT are safe, and very cost-effective as compared to donations through Payment Gateway or Cheques.

Cheques have to be sent for collection and the reconcialtion time from collection to realizations is 4-7 working days. And, the burden on the Banking System, in collection on Cheques is also high as compared to NEFT Transactions.

Reconcialtion time for NEFT Transactions is comparatively less, as the NEFT Transaction Voucher contains the requisite information.

And the best part is that the courier charges/postal charges in mailing the Cheque/Demand Draft, is NIL for NEFT Transactions.

Moreover, this is also an opportunity for the donors/public to become aware of the ePayments, and their immense possibilities.

Donor Agencies- Connect to NEFT for ease of processing

ATM withdrawal fees from 15/10/2009-15th October 12, 2009

ATM withdrawal fees from 15/10/2009-15^th October 12, 2009

One of the major news items in today’s Newspapers was on the Curbs on ATM use from Oct. 15.

The news articles state that as per Indian Bank’s Association recommendation, Reserve Bank of India has asked the banks to impose the restrictions on third-party ATM usage from mid-October.

As a result, the number of free cash-withdrawals from third-party ATM’s will attract a charge.

The highlights are

01) The transaction limit is set at Rs10,000/-

02) Saving Account Holders can withdraw five times in a month free –of-cost.

03) From the sixth transaction, the fees is Rs20/-

04) Current Account Holders will be charged from the first transaction itself.

05) BALANCE ENQUIRY is still free.

However, each bank basing on the account profile/product type can decide not to charge its customers, but absorb the interchange fee.

The market will be the deciding factor.

I have been searching the Internet for the relevant Indian Bank’s Association/Reserve Bank of India Notification. No such luck.

I feel that this Notification should be in public domain, for the lay public to understand the rationale for the fees.

Tips for easier ATM Transactions after 15/10/2009-15^th October 12, 2009

01) In case your Bank’s ATM, is out-of-order or you are unable to withdraw cash for any reason, immediately lodge a complaint with your Bank. This will aid the bank to provide a superior customer service.

02) As people will tend to withdraw in higher amounts now, ATM’s will dispense High Denomination Notes. To avoid this issue, swipe your Card in POS Terminals at Merchant Establishments, for purchases.(Of course the basic safety measures are to kept in mind)

03) Avoid withdrawing large amounts in cash at night, or unfamiliar locations.

 Once the facility of withdrawing cash (up to Rs1000/-) is introduced at POS Terminals, life might become a little easier.

ATM's-The free tour is over

POS Terminals-An Aid to Impulse Donation’s.

POS Terminals-An Aid to Impulse Donation’s.

Donations to Religious Institutions/Charitable Institutions/Hospitals/NGO’s on Internet via Online Banking /Credit Cards/Debit Cards are common.

This method of Payment is also catching up amongst Indians, and is a very popular method of Donations for NRI’s.

However, to my surprise, so far no one has understood the potential of Point of Sales Terminals(POS), as an aid for Donations.

Walk into any Religious Institutions/Charitable Institutions/Hospitals/NGO’s, and the mode of Donation is Cash/Kind or at the most Cheque.

Have you ever seen a POS Terminal to swipe the money from your Credit Card/Bank Account and complete the Donation Cycle.

Religious Institutions/Charitable Institutions/Hospitals/NGO’s, can install POS Terminals at their office’s, and see their Income via Donations zoom.

I go to a temple, and come to know that for a Donation of Rs5116/- Lunch Sponsor, for a particular day, every year, suits me. But, unless the visit and intention to donate are planned in Advance, I will not carry that much cash. So the temple has lost a donation of Rs5116/-, unless I visit the temple again, with the express purpose of Donating Rs5116/-.

A POS Terminal at the temple, would have made my job easier of Donating, and the Temple too would have gained a Donor,.

It is observed, that in supermarkets, 20% Buying is Impulse Buying i.e there is scope of Impulse Donation too!!!!.

Impulse-(Whim, Urge, Fancy) emotions can be tapped by Religious Institutions/Charitable Institutions/Hospitals/NGO’s, to attract Donations. And, the best tool is POS Terminals.

I go a Religious Institution, with my friends, offer prayers, and I observe my friend making a Donation. Impulsively I too make a donation.

But, if I am making a Donation through POS Terminal, the Donation size will be bigger!!

The Benefits of POS Terminals at Religious Institutions/Charitable Institutions/Hospitals/NGO’s are

• Tap into the Impulse Emotions.
• Increase the ADPV(Average Donation Per Visitor). A new term coined by me.
• Enhance credibility amongst Visitors, as Donations through POS Terminals, will be accounted for.
• Reflect a Modern Outlook, to Visitors. 

The Benefits of POS Terminals at Religious Institutions/Charitable Institutions/Hospitals/NGO’s for Banks are

• Religious Institutions/Charitable Institutions/Hospitals/NGO’s, saving accouant with the Banks. A sure way to increase the CASA of the Bank.
• Indirect Marketing of the Bank, by way of Bank’s Logo being displayed at the Religious Institutions/Charitable Institutions/Hospitals/NGO’s.
•  A simple method to minimize cash handling of Religious Institutions/Charitable Institutions/Hospitals/NGO’s.

 Which Bank will be first  in this new Wave of ePayments