RBI Discussion Paper on Charges in Payment Systems - Sample feedback for RTGS Questions

 RBI Discussion Paper on Charges in Payment Systems - Sample feedback for RTGS Questions

          The window to provide feedback to Reserve Bank of India for its ‘Discussion Paper on Charges in Payment Systems’, has started.

          The last date to provide feedback is 3^rd October 2022.

          Today’s blog talks about Sample feedback for RTGS Questions.   

          There are 3 specific questions regarding RTGS.

 

Para No 8.2 Real Time Gross Settlement (RTGS) System

Page No 8 and 9

8.2.6. Questions for Feedback

 

i.(S1) Should RBI review the policy of not levying charges on members for RTGS transactions?

Sample Feedback __ i.(S1)

Yes, RBI should review the policy of not levying charges on members for RTGS transactions.

Option 1 – Fixed – EX: INR 3/- per customer outward transaction

Option 2 – Variable – Ex INR 4/- per customer outward transaction up to 25,000/- customer outward transactions per day

INR 2/- per customer outward transaction above 25,000 and up to 50,000/- customer outward transactions per day

INR 1/- per customer outward transaction above 50,000 and up to 75,000/- customer outward transactions per day

Nil for transactions above 75,000 transactions per day

As all banks may not high RTGS outward customer transactions, Banks can choose between Option 1 and Option 2

 

 

ii.(S2) Should the time-variable charges be re-introduced?

Sample Feedback __ ii.(S2)

Yes, the time-variable charges should be re-introduced but in a reverse method

EG: All Days

12:01 to 13:00 Hours - INR 20/- per transaction credited to customer

13:01 to 18:00 Hours - INR 10/- per transaction credited to customer

18:01 to 23:59 Hours - Nil

The exceptions not exceeding 5 may be approved by the respective Bank’s Board.

 

iii.(S3) For RTGS transactions, should RBI prescribe the charges that can be levied on

customers by members, or should they be market driven?

 

Sample Feedback __ iii.(S3)  A) RBI should prescribe the charges that can be levied on customers by members. There can be a maximum gap with an auto-increase of the same say by 5% with rounding off to the next rupee

EG: Year 1 – INR25/-

Year 2 – Increase of 5% 25 + 1.25 = 26/-

Year 3 – Increase of 5% 26 + 1.30 = 27/-

And so on,

B) The credit window for Inward customers transactions may be reduced to 15 minutes from the present 30 minutes, with minimum exceptions. The exceptions not exceeding 5 may be approved by the respective Bank’s Board.

C) The maximum transmission time for outward customer transactions from the debit moment, may be introduced. If this transmission time is crossed, banks may be required to compensate the customers. The exceptions not exceeding 5 may be approved by the respective Bank’s Board.

EG: Customers Account, by whatever mode is debited at 11.30am on 17/08/2022. The beneficiary should receive the funds with 13.30pm on 17/08/2022. The window between the actual debit and the actual credit may be finalised by mutual consent of all RTGS participants.

 

D) As on today, in case, it is not possible to credit the funds to the beneficiary’s account for any reason e.g. account does not exist, account frozen, etc., funds shall be returned to the originating member within one hour of receipt of the payment at the Member Interface of the recipient member, subject to availability of RTGS.

The 'One Hour' window may reduced to '30 Minutes'

E) The minimum amount for RTGS Customer Transactions may be increased from the present INR2lacs to INR2.50lacs, with auto increase of say INR25,000/- every calendar year

 

Additional Reading

RBI seeks responses to its 40 Questions - Discussion Paper on Charges in Payment Systems @ https://prashantnepayments.blogspot.com/2022/08/rbi-seeks-responses-to-its-40-questions.html

RBI FAQs on RTGS @ https://m.rbi.org.in/scripts/FAQView.aspx?Id=65

Time-varying charges for transactions in RTGS @ https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11564&Mode=0

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing Less.

As of now this is only sample feedback. The actual feedback will be provided to Reserve Bank of India via email.

LEI makes a debut in Centralised Payment Systems

 

        Reserve Bank of India vide Cir No RBI/2020-21/82 DPSS.CO.OD No.901/06.24.001/2020-21 dt. January 05, 2021 laid down the road map for ‘rollout of Legal Entity Identifier for Large Value Transactions in Centralised Payment Systems’.

        The circular is addressed to ‘The Chairman / Managing Director / Chief Executive Officer of member banks participating in RTGS / NEFT’

Q: What is The Legal Entity Identifier (LEI)?

Ans: The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties to financial transactions worldwide.

Legal Entity Identifier (LEI) was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis.

Q: What is the Legal Entity Identifier (LEI) background?

Ans: LEI has been introduced by the Reserve Bank in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.

The first circular on LEI was issued by Reserve Bank of India in November 2017, vide Cir. No RBI/2017-18/82 DBR.No.BP.BC.92/21.04.048/2017-18 dt. November 02, 2017

 

Q: What are the attributes of the of Legal Entity Identifier (LEI) ?

Ans: The International Organization for Standardization (ISO) 17442 standard defines a set of attributes or legal entity reference data that are the most essential elements of identification. The Legal Entity Identifier (LEI) code itself is neutral, with no embedded intelligence or country codes that could create unnecessary complexity for users.

 

The ISO 17442 standard specifies the minimum reference data, which must be supplied for each LEI. This data is usually referred as Level 1 Data - Who is who:

Q: What is the structure of Legal Entity Identifier (LEI)

Ans: An LEI number (Legal Entity Identifier) is a unique identification number which is issued to companies which operate in the global financial system. LEIs are based on ISO standard 17442:2012.

An LEI is issued only once for each company and consists of 20 characters:

·        The first 4 characters are unique to the LOU which has issued the LEI.

·        The 5th and 6th characters are the same for each company – 0.

·        The following 12 characters consist of letters and numbers and are unique for each company.

·        The final 2 characters are known as the checking characters.

The first LEIs were issued in December 2012. As of 3 January 2018, LEIs are mandatory for all companies that trade in securities.

Q: What is the change in Reserve Bank of India Cir No dt No RBI/2020-21/82 DPSS.CO.OD No.901/06.24.001/2020-21 dt. January 05, 2021?

Ans: RBI has intimated respective participants to roll-out the LEI system for all payment transactions of value ₹50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

Q: What are the preparatory steps advised by RBI for the LEI rollout?

Ans: In preparation for the wider introduction of LEI across all payment transactions, member banks should:

advise entities who undertake large value transactions (₹50 crore and above) to obtain LEI in time, if they do not already have one;

Q: In what fields should the LEI Number be included in RTGS and NEFT Payment Messages?

Ans: Banks should include remitter and beneficiary LEI information in RTGS and NEFT payment messages (details of the identified fields in the messaging structures of RTGS and NEFT for inclusion of LEI information are at Annex);

Q: How can the entities obtain LEI?

Ans:  Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI.

In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL) (https://www.ccilindia-lei.co.in), which is also recognised as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007.

Q: What is the effective roll out date of this directions?

Ans: The rollout date is April 1, 2021.

 

Annex:

Bank Customers who must obtain LEI - All non-individual customers initiating or receiving transactions of ₹50 crore and above through RTGS and / or NEFT.

Fields in NEFT and RTGS payment messages to be used for recording Remitter and Beneficiary LEI :

·        For RTGS customer payment transactions, LEI information shall be provided in ‘Remittance information’ field.

·        For NEFT outward debit messages, LEI information shall be provided in ‘Sender to Receiver Information’ field.

 

Printing of MICR Code and IFSC Code on Passbook/Statement of Account

RBI, DPSS has announced another customer-friendly initiative. It has advised all Chairman and Managing Director / Chief Executive Officer of all banks participating in RTGS, NEFT and NECS to make arrangements for Printing of MICR Code and IFSC Code on Passbook/Statement of Account

The relevant RBI notification can be accessed here.

The display of MICR Code and IFSC Code is presently available only on the Cheque leaf of the account holder.

MICR code is necessary for all Electronic Clearing Service (ECS – Credit and Debit) transactions.

Similarly, the IFSC code is a pre-requisite for NEFT and RTGS transactions.

To improve customer efficiency levels and to ensure a high success rate for ePayments, RBI has advised Banks to take necessary steps to provide this information as indicated above in all passbook / statement of account to their account holders.

The respective Banks have to furnish to RBI, an action taken report within 15 days of receipt of this circular.

3 immediate benefits of this RBI Notification.

1. Bank customers have an additional authenticated source of MICR/IFSC Code.
2. Ease in sharing MICR/IFS Code with any remitters.
3. Increase in success rate for ePayments.

RTGS (Real Time Gross Settlement) – India's Large Value ePayment System open up to 20.00hrs on 31/03/2012.

This has been done in view of:-

• the expected huge volumes on 31^{stMar 2012,}
• 31^st Mar 2012 being the last working day for financial institutions
• 31^st March 2012 being a Saturday

Reserve Bank of India, DPSS has announced that RTGS will be open up-to 20.00hrs for Customer Transactions and upto 22.00hrs for Inter-Bank Transactions.

The announcement has been made in advance to enable all the participants I.e Bank Branches, Bank's customers, Bank's Staff, IT Support to be prepared for the extended window.

Bank's Treasury usually does not function on Saturday, but on 31^st March 2012, have to make an exception, and be tracking the RTGS Outwards/Inwards of their respective banks.

RBI by announcing the extended timings two days earlier has demonstrated its willingness to go the extra mile, to ensure customer delight.

Now, it is up to the Bank's customers to make the best of this extension.

4 top advantages of this extension :

1. No last minute surprises for the Participants.

2. Resources can be planned better, either by Banks or the Bank's customers.

3. Piling up of messages at the various Payment Gateways will be minimized.

4. Encourage customers to migrate to Safe ePayments

RTGS Holidays - 2012

RTGS Holidays – Year 2012

No	DATE	OCCASION
1	Thursday, January 26, 2012	Republic Day
2	Monday, April 02, 2012	Annual Closing of Banks
3	Friday, April 06, 2012	Good Friday
4	Monday, July 02, 2012	Annual Closing of RBI
5	Wednesday, August 15, 2012	Independence Day
6	Monday, August 20, 2012	Ramjan Id (Id-Ul-Fitar) (Shawal-1)
7	Saturday, September 29, 2012	Half Yearly Closing of Banks
8	Tuesday, October 02, 2012	Mahatma Gandhi Jayanti
9	Wednesday, October 24, 2012	Dasara / Dashami
10	Tuesday, November 13, 2012	Diwali Amavasya (Laxmi Pujan) / Kali Puja
11	Tuesday, December 25, 2012	Christmas

Discretion to customers for selection between RTGS and NEFT – Is it required?

Discretion to customers for selection between RTGS and NEFT – Is it required?

This was waiting to happen. RTGS and NEFT have similar objectives; though a close observations of the same, show that both are different.

Apart from the charges, RTGS is Gross Settlement, whereas NEFT is Batch Settlement. I am sure, by now the Bank customers are familiar with the basic differences between RTGS and NEFT.

As the end goal of RTGS and NEFT was the same i.e movement of funds from one Bank Account to another Bank Account, the customer was not provided the choice to choose between RTGS and NEFT.

Majority of the times, the discretion was with the Bank, either to route it through RTGS or NEFT. This is more so, in case of Internet/Mobile Banking.

To enable the customer to decide the mode of funds transfer between RTGS and NEFT, RBI today released a Notification, stating that the customer should have the option to choose between RTGS and NEFT, at the time of initiation of the funds transfer.

The RBI Notification No is: RBI/2011-12/152 DPSS (CO) EPPD No./274/04.03.01/2011-12 dt. August 12, 2011

The RBI notification can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6672&Mode=0  

The Banks participating in RTGS/NEFT have been requested to ensure compliance as per the above notification.

There will be a huge impact for the Banks, as the IT infrastructure has to be suitably modified.

The IT Application’s have to be mainly modified in the area of Internet/Mobile Banking arena.

There will be minimal impact on transactions routed through the Branch Desk, as the Desk Officer, can initiate the funds transfer as per customer request. 

Only in case of automated transactions, appropriate modification in the IT Application will be required.  

In the long run, such discretion will aid in increasing the flow of transactions to RTGS/NEFT

RTGS – Increase in Threshold Limit – 1 lac to 2 lacs -

RTGS – Increase in Threshold Limit – 1 lac to 2 lacs -

RTGS is a familiar word for all associated with financial industry or any business. In a sense, more than the Bankers, Business users are more familiar with RTGS.

RTGS in our country was rolled out in May 2004, and in the last 6 years, the RTGS growth has exceeded all expectations.

The credit for this spectacular performance must be shared by Reserve Bank of India, IT vendors, Banks and the Bank’s Customers.

To keep up the pace in RTGS modifications, Reserve Bank of India, DPSS has announced change in the threshold amount for RTGS Transactions.

Existing Threshold Amount: Rs.1 lac.

Revised Threshold Amount: Rs.2 lacs.

The revised guidelines will be effective from 15/11/2010

The notification can be accessed @ http://goo.gl/nQCYW

Initially, there might be a fall in the RTGS volumes, but there will be corresponding increase in the NEFT Volumes.

By March, 2011, the shortfall will be covered up.

Not many changes will be required in the Bank’s infrastructure.

Only Staff at Bank’s Touch Points/Customers will have to sensitized.

However, with the revised threshold amount being widely discussed in Print/Electronic Media, business forums, etc, the news will spread fast, in a quick span of time.

Long time back, RBI, had insisted for Banks to ensure that the IFSC’s for RTGS and NEFT are common. Hence, the customer’s too would not feel the pinch of shifting transactions from RTGS to NEFT

RTGS Holidays for 2010

 RTGS Holidays for 2010

Reserve Bank of India, has declared the RTGS Holidays for 2010. The same are reproduced below.
In 2009,  the number of  RTGS Holidays were 14, apart from  Sundays.
In 2010,  the number of RTGS Holidays are 11, apart from Sundays.


This might be due to the fact, that many Festivals in 2010, are on Sundays. So, naturally, the number of holidays on other days are less.

Three holidays i.e September 11, 2010 - October 02,2010 - December 25, 2010, fall on saturdays. This means that ePayments will continously be closed for 2days at a strech.

 
QUOTE

 RTGS Holidays - Year 2010

Sl. No.             Date                 Day                         Occasion       
1.     January 26, 2010         Tuesday                     Republic Day       
2.     April 01, 2010             Thursday                   Annual Closing of banks       
3.     April 02, 2010             Friday                        Good Friday

      
4.     July 01, 2010             Thursday                     Annual Closing of RBI       
 

5.     September 11, 2010     Saturday             Ganesh Chaturthi / Id-Ul-Fitr       
 

6.     September 30, 2010     Thursday             Half-yearly closing of banks       
 

7.     October 02, 2010     Saturday                     Mahatma Gandhi Jayanti       
 

8.     November 05, 2010     Friday                     Diwali / Kali Puja       
 

9.     November 17, 2010     Wednesday                 Bakri Id       
 

10.     December 17, 2010     Friday                     Moharrum    

  
11.     December 25, 2010     Saturday                 Christmas    
UNQUOTE

New RTGS Timings on Saturdays

New RTGS Timings on Saturdays

In January 2009, Reserve Bank of India, extended the timings for RTGS Transactions.
Continuing this tradition, Reserve Bank of India, has further modified the RTGS timings for Saturdays w.e.f 11/12/2009.


         Existing                                                       New
 Saturday RTGS Timings                  Saturday RTGS Timings
Customer        12.30pm                            Customer    1.30pm

Inter-Bank          2.30pm                          Inter-Bank    3.00pm

   
The RTGS Customers timings have been extended by an hour. Folks may say, what is the use of extension of timings, as most of the Bank Branches function only for half-day on Saturdays and majority of the Bank Branches close by 12.30pm.

But through Internet Banking, the transactions can be executed by the customers themselves. So, the extended timings are a benefit only. Initially the volumes in the extended hour might be low, but once the customers get used to the new timings, the volumes will surely increase.

This is a precursor to new timings on Weekdays too, which might be announced in the next couple of months.

 

RTGS Transactions All India January 2009 to October 2009

RTGS Transactions All India January 2009 to October 2009

Today’s Post is regarding the growth of RTGS Transactions in our Country.

The below Table shows the growth in the last 9 months.

Major Highlights:

01)  There was a fall in the transactions in April 09, as compared to March 09. This is due to the normal business cycle.

02)  The highest % of growth is observed in October 2009.

RTGS Transactions Jan 09 to Oct 09-All India
Month	No of Transactions	Increase over previous month	% Increase over previous month
Jan-09	1436951
Feb-09	1498555	61604	4
Mar-09	1941215	442660	30
Apr-09	1813195	-128020	-7
May-09	1978787	165592	9
Jun-09	2230310	251523	13
Jul-09	2346972	116662	5
Aug-09	2322862	-24110	-1
Sep-09	2433615	110753	5
Oct-09	2925034	491419	20

SEBI-Extension of Bourse Timings

Well SEBI has decided the bourses to extend the market hours by by around two-and-a-half hours between 9 am and 5 pm.

The current market hours stand from 9.55 am to 3.30 pm.

" ... it has been decided to permit the stock exchanges to set their trading hours (in the cash and derivatives segments) subject to the condition that the trading hours are between 9 am and 5 pm," SEBI said.

The Securities and Exchange Board of India (SEBI) further asked the bourses to reset their timings provided they have in place risk management system and infrastructure commensurate to the trading hours.

What are the implications for the Bankers:

Bankers have to gear up for the extended trading hours, as Brokers/Exchanges will be requiring access to funds during the trading hours.

The RTGS timings will be extended further, to be in tune with the Stock Exchanges Trading Hours.  Both the RTGS Opening time and Closing time might be extended.

This extension of timings will be beneficial to other Bank Customers as well.

Please refer my earlier Post on this subject @

http://prashantnepayments.blogspot.com/2009/07/increase-in-rtgs-timings-is-it-required.html

The SEBI Circular can be accessed at

http://www.sebi.gov.in/circulars/2009/dnpdcir47.pdf

Bankers, Prepare for the Extended Timings.