National Electronic Funds Transfer (NEFT) - Acceptance of NEFT inward for credit to Loan Accounts

Reserve Bank of India, vide Notification No.RBI/2011-2012/496, DPSS (CO) EPPD No.1894/04.03.01/2011-12, has advised all Banks to accept Loan Credits via NEFT also.

This advisory was necessitated as RBI had received some complaints from customers regarding non-acceptance of NEFT for credit to loan accounts, which was causing inconvenience to the Loan Customers.

As the Banks were willingly taking ECS (Dr) as one of the modes for the repayment and NEFT also being an electronic transfer mode, Banks have been advised to allow the customers to choose NEFT also as one of the electronic modes of making payment towards loan EMIs / repayments etc.

5 reasons as to why do Banks not prefer NEFT Credits to Loan Accounts?

1. Loan Accounts are not part of the Core Banking System, hence, real-time verification of Loan Account Number and customers' name is delayed.

2. Customers might pre-pay the Loan which might not be preferred by Bankers.

3. The actual credit to Loan Accounts might take 2/3 days, in between if the ECS transaction is generated and sent to the Destination Bank, the customers account in the other bank might be debited twice for the same installment. This leads to subsequent customer complaints at a later date.

4. Customers might remit a lesser amount than the Monthly Installment amount, leading to overdue interest being charged in the Loan Accounts. If this is not properly communicated to the Loan customer, there are high chances of customer complaints.

5. If there are multiple credits in a single month, the EMI (Equated Monthly Calculation), will be lopsided, with no clarity.

7 tips to ensure that your NEFT credits to your Loan Account are hassle-free: -

a) Activate your Loan Account in the net banking module.

b) Add the Loan Account as a Payee in your net banking module, funds remitting bank account.

100. Do a test transfer of say Rs10/- and verify the credit in your Loan Account.

d) This will also enable you to know the Lead time between the actual NEFT transfer and the actual Loan Account, which will be useful when transferring the actual payment

e) Once the amount is transferred, inform the details to the customer service email id of the Loan Bank.

f) Verify the credit in your loan account after couple of days.

g) In case of any doubt, immediately mail/lodge query with the respective Loan Bank.

107+ Banks are on NEFT platform, with 2,16+crs transactions being put through the same.

Well, apart from Banks, there are other financial institutions which disburse Loans and collect the repayments through ECS(DR). Trust NEFT credits to such Loan Accounts will also be enabled soon.

Time – limit Reconciliation of failed transactions at ATMs slashed

Time – limit Reconciliation of failed transactions at ATMs slashed

With Banks gaining experience in the recon of failed transactions at ATMs, Reserve Bank of India, DPSS has decided to slash the time limit for resolution of the customer complaints by the Issuing Banks from 12 working days to 7 working days.

The Notification No is : RBI/2010/11/547, DPSS.PD.No.2632 / 02.10.002 / 2010-2011 dt.May 27, 2011

The complete notification can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6437&Mode=0

The high lights of the notification are:-

1.     The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to 7 working days from the date of receipt of customer complaint. Otherwise compensation of Rs100/- for every delayed day will be due to the customer.

2.     Compensation can only be claimed if the customer’s lodges the complaint with the ATM Card Issuing Bank, within 30days of the transaction. Yes, such a time limit is necessary to encourage customers to lodge complaints as early as possible. The older the complaint is, the difficult it is trace the corresponding records.    So folks, preserve your charge slips and lodge complaints immediately. The ideal mode of complaints is handing over in person in the Branch or via email/online complaint lodgement

3.     Another important change is on the number of free transactions. The number of free transactions permitted per month at other bank ATMs to Savings Bank account holders shall be inclusive of all types of transactions, financial or non-financial. At present, 5 free transactions are permitted at other Bank ATMs. There was no clarity as to whether the number of free transactions, included non-financial transactions or not. RBI has now clarified, that the limit for free transactions will be all inclusive. It is up to the customers as to how they make use of the free transactions limit.

4.     It has been made clear that all the disputes regarding ATM failed transactions will be settled between the Issuing Bank and Acquiring Bank through the ATM system provider ONLY. The practice, if any, of bilateral arrangements outside the ATM dispute resolution mechanism is discouraged.

5.     The directive shall be effective from July 01, 2011

Banks are encouraged to widely publicize these changes at all ATM locations and also by individual intimation to customers.

These changes can be intimated individually to customers via a pamphlet with the Monthly/Quarterly statement of accounts dispatched to account holders

Implication:

Majority of the Banks have streamlined their internal systems for the effective ATM recon issues, so this will not be a major change for the ATM Recon Team.

The major change for the customers is on the ‘free transaction limit’. They have to remember financial and the non-financial transactions too. Otherwise, they will have to shell out charges. This discipline is necessary for the overall financial viability of the system.

As I always say, why use ATMs, go for POS transactions while shopping, dining, paying fees etc.

RTGS System – Use of NEFT Customer Facilitation Centres

RTGS System – Use of NEFT Customer Facilitation Centres

The RTGS Participants i.e Bankers, Customers, RBI-DPSS, have felt the need for RTGS Customer facilitation centres on the same line of NEFT Customer Facilitation Centres launched in 2009.

As the NEFT Customer Facilitation Centres, has been a success, RBI has advised Banks to make use of the same centres to resolve RTGS complaints too.

The Notification can be accessed @ http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6164&Mode=0

In majority of the banks, there is a common hub for both RTGS and NEFT transactions. Such banks should be able to quickly adapt to the above directives.

In the few banks, which have a different hub for RTGS and NEFT, the adaptability will be a little slow.

In the long run, Banks will find it advantageous to have a common hub for RTGS/NEFT monitoring or at least be in the same location.

From the customer’s view, a transaction routed through RTGS or NEFT is irrelevant as long as it is a ePayment transaction.

Ideally, in the front end for customers accessing the Net Banking, there should be minimal difference between RTGS and NEFT Data-entry screens.  

As I keep repeating, Banks should have a common email id, which will be easy to remember. Some suggestions.  

epayments@_____________ (bank name)

ccuseapayments@_________(bank name)

Individual email id’s should be discouraged, as the emails will become invalid, on the person leaving the organization or moving to other department.

RTGS / NEFT Return Transactions – Information in Account Statement

RTGS / NEFT Return Transactions – Information in Account Statement

With the exponential growth in the RTGS/NEFT Transactions, RBI, DPSs, is making all efforts to ensure that the RTGS/NEFT experience for the end-users is excellent.

In this connection, today, (13/08/2010), Reserve Bank of India, Department of Payments and Settlement Systems, has issued new guidelines.

The RBI Notification number is RBI/ 2010-11/169 DPSS (CO) RTGS No. 341 / 04.04.002 / 2010-2011 dt.August 13, 2010, addressed to Chairman and Managing Director/ Chief Executive Officer of all banks participating in RTGS and NEFT.

The circular can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5945&Mode=0

The Highlights are:

1.      Uniform information for RTGS/NEFT Returns in the customer’s account statement.

2.      The following are the description to be provided

a) RTGS Return transactions

 -- RTGS-RETURN---

b) NEFT Return transactions

-- NEFT-RETURN—

3. The instructions will be live from 01/10/2010

Why was this Notification required?

Ø  With the growth of the RTGS/NEFT transactions, the customers were finding it difficult to reconcile transactions.

Ø  The non-uniformity of narration of Return Transactions, only added to the confusion.

Ø  The confusion was creating issues in Service Delivery at the customer’s point of touch i.e Bank Branches, Phone Banking.

What will this Notification achieve?

v  Introduce a uniform Return Description

v  Reduce the opportunities for customer complaints

v  Enhance the customer confidence in RTGS/NEFT System

v  Encourage new entrants to ePayments

Yes, obviously System changes as well as process changes in the Banks will be essential.

FootPoint: DPSS is one of the few department’s  which issues simultaneous instructions to Commercial Banks, Co-operative Banks.

ECS Debit – Return Reasons

ECS Debit – Return Reasons

It is observed that the number of ECS Transactions being RETURNED by the Destination Banks are  on the increase.

Your ECS Debit transaction can be rejected by your Banker for the following reasons

As per RBI’s Electronic Clearing Service (Debit Clearing) Procedural Guidelines, the following are the Standard Return Reasons.

Code No.        Reasons for Return

1.                    Account since closed / transferred

Explanation: - Account since closed – The destination account has been closed. Obviously, this has to be returned.

Account Transferred: This reason was valid in a de-centralised environment, when the ECs transactions were being routed to the base branch.

However, under CBS this is a very sparingly used Return Reason.

2.                    No such account:

Explanation: The account number in the ECS Transaction is not in the Destination bank’s books.

Potential causes: The customer’s account has been migrated to the CBS domain, and a new number allotted. However, the ECS transaction is still coming with the old Account number.

3.                    Account description does not tally

Explanation: The account holder’s name in the destination bank and the account holders name in the ECs transaction do not match.

This is a very rare reason, as the Account description is tallied at the time of the Mandate Acceptance by the Destination bank.

4.                    Balance insufficient

Explanation: Simple, inadequate balance to debit the ECS transaction amount. It is to be noted, that there should be sufficient balance at the time of the debit, and not during the business day. For eg: When the destination account is debited with the ECS transaction at 11.30am, 14/07/2010, sufficient balance should be there. It is of no use, if there was sufficient balance at 10.00am or 2.00pm on the same day.

5.         Not arranged for / exceeds arrangements

Explanation: This reason is used for Overdraft Accounts, where the drawn balance exceeds the available balance.

6.         Payment stopped by drawer

Explanation: The destination account holder has instructed his/her banks for  Stop Payments of the Particular ECS Transaction.

Potential causes: Dispute between the account holder and the Beneficiary. Loan account is closed, but still the ECS transactions are being routed.

7.         Payment stopped under court orders

Explanation: The message is clear, Payment stopped under court orders

8.         ECS mandate not received

Explanation: The Destination bank has not received the ECS Mandate.

ECS Mandate is the Debit Authorisation by the customer to the bank.

9.                    Miscellaneous (to be specified)

Explanation: Ah, this is the most exciting or treacherous Return Reason

Will explain in detail in tomorrow’s post

Annual Report of Banking Ombudsman Scheme-2008-2009

Annual Report of Banking Ombudsman Scheme-2008-2009.

Today Reserve Bank of India has placed on its website the Annual Report of Banking Ombudsman Scheme-2008-2009.

The Link to access the complete report is

http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=22103

A reading of the complete document highlights the increased awareness amongst Bank Customers regarding the Banking Ombudsman Scheme.

I see this report as an opportunity for Banks to improve the Service Quality.

I believe that the front-end Banking Staff are providing superb customer service, in Banking Ombudsman Scheme in spite of the various barrier’s at their end.

It is a good sign that the highest number of complaints are in the ATM/Credit Card arena. This is applicable to all Banks across the industry.

This means the industry has a whole has to address this issue.

The best part is with the increase in the number of complaints, the average cost per complaint is coming down.

This is good for all the parties.

An ombudsman is someone who handles complaints and attempts to find mutually satisfactory solutions.

Abroad Ombudsmen can be found in government, corporations, hospitals, universities and other institutions.

The first ombudsman was appointed in 1809 in Sweden to handle citizens' complaints about the government. The word is pronounced "om-BUDS-man" and is Scandinavian in origin.

In India, apart from Banking, the Insurance Industry too has an Ombudsman.

Maybe, with the Banking Ombudsman being a success, it is time, that Ombudsman Scheme in other sectors also are  introduced.

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:

Tit-Bits - Booked Railways Tickets at IRCTC Site-Get a confirmation SMS.

  

Booked Railways Tickets at IRCTC Site-Get a confirmation SMS.

In this era of Online Travel Booking, a wonderful site is the Indian Railways Online booking site i.e IRCTC.

Many of the Rail Travelers are familiar with this user friendly Site.

The Personal Data in the Individual IRCTC Accounts is of utmost importance, and the users need to be aware of any unauthorized transactions in this account.

Surprised? Than read on:-

01)                      In case of any accident, the Booked Ticket History and the Address mentioned in the Account are of immense use, to authenticate the family members.

02)                     The Booked ticket history provides an insight to the Traveling plan, which can be misused by fraudulent persons.

To avoid misuse of the Individual IRCTC accounts, IRCTC has tied up with Spice Digital, to shoot a SMS once a ticket is booked in the Users Account.

This SMS will consist of the booking details, such as the PNR (Passenger Name Record) number, the date of journey, class of travel, and originating & destination stations.

More details on this new launch by IRCTC and Spice Digital can be viewed @

http://www.thehindubusinessline.com/2009/11/25/stories/2009112550440500.htm

Highlights in Brief:

01)                      An SMS can contain a maximum of 160 characters. 80 characters will be used for the ticket information and another 80 characters will carry an advertisement.

02)                     The advertisement revenue will be shared between SPICE and IRCTC.

03)                     Spice has set up an SMS gateway server at its own cost at IRCTC’s physical site.

04)                     IRCTC insisted on this to reduce the chances of data theft.

05)                     SMS Alerts will be received only when the mobile phone number is registered at the IRCTC Site.

This is a win-win situation for the Indian Railways, Spice and Rail Travelers.

I am sure Indian Railways/IRCTC has taken an undertaking from Spice Digital

01) Not to misuse the Rail Travelers Phone Numbers for any other purpose, than sending SMS for IRCTC Transactions.

02) Not to access the telephone numbers for any marketing purpose.

Where is the relation to ePayments in this whole new service? Simple, once folks are sure of the safety of information on IRCTC, more and more folks will book tickets via IRCTC. This will surely increase the numbers of ePayment Fans.

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

Simple Procedure for REVERSAL OF FAILED ATM TRANSACTIONS.

Simple Procedure for REVERSAL OF FAILED ATM TRANSACTIONS.


A common complaint amongst ATM users is that their respective account has been debited, but the necessary cash has not been received by them. And, in this era of centralization, customers are facing difficulties in resolution of their complaints.

The delays in resolving the issues are primarily due to submission of incomplete data by customers to the respective banks.
The ATM Transaction Slip, is the most important piece of paper in an ATM Transaction.
The ATM Transaction Slip, contains all or most of the following information:-
01) Name of the ATM Bank
02) Location
03) Date of transaction
04) Time of transaction
05) Transaction reference number
06) Response Code
07) Card No/Account Number- only the last 3-4 digits will be visible
08) Nature of Transaction


Today, I will try to explain a simple procedure for REVERSAL OF FAILED ATM TRANSACTIONS.

01) Preserve the Original ATM Transaction Slip. This is the most important piece of paper required to substantiate your amount claim. ------- -- -- Many of the today’s ATM’s indicate that the paper is not available to generate ATM Transaction Slip, and request to proceed further. If the paper is not in stock, DO NOT execute the transaction, cancel the transaction and proceed to the next ATM.

02) Scan/Xerox the Original ATM Transaction Slip, as the ink of the Original ATM Transaction Slip, will fade after a week. You will find that the Original ATM Transaction Slip, has turned into a harmless white paper!!!!!!!!

03) Call up the customer care number of the ATM Bank, and inform the complaint details. Insist on a complaint number. This will help in tracking the complaint and the time-frame of resolution.

04) Call up the customer care number of the your Bank, and inform the complaint details. Insist on a complaint number. This will help in tracking the complaint and the time-frame of resolution.

05) Email the complaint to the customer care department of the ATM Bank and your Bank, as early as possible.

As per the latest Reserve Bank of India, guidelines, It is mandatory for the banks to reimburse the customers, the amount wrongfully debited on account of failed ATM transactions, within a maximum period of 12 working days from the date of receipt of the customer complaint.

ii) For any failure to re-credit the customers account within 12 working days from the date of receipt of the complaint, the bank shall pay compensation of Rs.100/-, per day, to the aggrieved customer. This compensation has to be credited to the customer’s account automatically without any claim from the customer, on the same day when the bank affords the credit for the failed ATM transaction.

Please refer
http://prashantnepayments.blogspot.com/2009/07/atm-related-complaints-on-rise.html

Hence, if the disputed amount is not credited within 12 working days of lodging the complaint, you will be eligible for compensation of Rs.100/- per delayed day of credit. So, the earlier you lodge the complaint (proof required), the better it will be for you.

From the date of complaint lodgment, wait for 12 days and than verify your account for the credit. If the amount is not credited, escalate the complaint to the next level.

Help the Banks, to resolve your ATM Complaints faster,efficiently.

ATM Related Complaints on the rise.

ATM Related Complaints on the rise.
A lot of ATM Related complaints, have been addressed to Reserve Bank of India, in the last couple of months.

The rise in complaints is directly proportional to the increase of ATM Transactions, due to the, No Transaction Fee Facility from 1st April, 2009.
Roughly, since April 2009, the volumes have risen by 400%. And, the technology to cope with such a huge rise is not yet in place.

It is strange, that Banks, Technology Providers, were unable to visualize the huge jump in transactions.
In my view, the following couple of factors could be the reason for the stupendous spike in volumes.
01) The Average Withdrawal per transaction has come down, since the transactions are free.
02) Consumers are still not yet adequately educated about the benefit of Debit Card Transactions rather than Cash Transactions. 40% of the Cash withdrawal, is spent on locations, where a Debit Card could be employed to close the deal.

Now, it is expected that matters will be less chaotic in by this year-end, when Banks/Technology Providers will resolve the issues.

However, Reserve Bank of India, acting on the Customer’s Complaints, has issued a series of Notifications, to make life easier for the Customers. The latest Notification, is regarding Payment of Penalty Fees, for delayed reimbursement of wrong debits to the customer’s transactions.
The Complete Notification can be accessed at

http://rbi.org.in/scripts/NotificationUser.aspx?Id=5177&Mode=0

The above Notification is timely, however my Wish List is, that each ATM Booth should display the following Information

ATM ID
Customer Care Number
Customer Care Email ID



The present ATM Transaction Slip, contains the ATM ID, and it would be wonderful, if the Customer Care Number and Customer Care Email ID are also printed on the Transaction Slip.
This will make life easier for both the customers and the bank staff.

GONE IN 30 SECONDS…
An ATM must do these steps in 30 secs to make the transaction valid
1. An SBI ATM card holder swipes his card at an ICICI Bank ATM
2. The ATM links to its own core banking network to verify if it is an ICICI card
3. On finding it is an SBI card, it transfers data to the SBI Bank switch
4. The SBI switch connects to its core banking network and processes the transaction
5. After verification, the SBI switch communicates with the ICICI Bank switch
6. Finally, ATM dispenses the cash to the customer