Use of RTGS/NEFT/NECS/ECS for Credit to NRE Accounts – Compliance with FEMA Regulations and Wire Transfer Guidelines

Use of RTGS/NEFT/NECS/ECS for Credit to NRE Accounts –
Compliance with FEMA Regulations and Wire Transfer Guidelines

As the number of transactions of ePayments(RTGS/NEFT/NECS/ECS) go up in India, it is noticed, that there is a similar increase of ePayments(RTGS/NEFT/NECS/ECS) to NRE Accounts.

Credits to NRE Accounts have to comply with FEMA regulations and Wire Transfer guidelines.

Reserve Bank of India, DPSS, vide Lr.No. RBI/2009-10/122,DPSS (CO) EPPD No.327/04.03.02/2009-10, dtAugust 14, 2009, addressed to The Chairman and Managing Director/Chief Executive Officer of all banks, advised the Banks routing ePayment(RTGS/NEFT/NECS/ECS) Transactions to NRE Accounts, to comply with FEMA Regulations and Wire Transfer Guidelines

The complete Letter can be accessed at

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5215&Mode=0

The letter has placed responsibility on the

Credit Originating Bank/Sponsor Bank: To comply with the extant FEMA Regulations and the Wire Transfer Guidelines, for ePayments to NRE Accounts

Destination Bank: To ensure that all valid ePayments Transactions including NRE Credits, are handled through appropriate Straight-through-processing interface, and ‘not returned’.

This circular should reduce the complaints of NRE Customers, regarding non-credit of ePayments(RTGS/NEFT/NECS/ECS) transactions to their accounts.

NRE Friends-Now you can request for ePayments(RTGS/NEFT/NECS/ECS) to your accounts.

Steps to check Menace of Fake Notes-Explore Alternate Payment Modes.

Today i.e 12^/08/2009, Reserve Bank of India, has released the Final Report of High Level RBI Group suggests Steps to check Menace of Fake Notes.

The Copy of the press note can be accessed at this link

http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=21174

The recommendations of this Report, when implemented, should reduce the fake notes menace in our country.

As a ePayment devotee, I am interested in the recommendation, that Alternate Modes of Payment need to be promoted.

One of the major recommendations of this RBI Group, to check the menace of fake notes is to promote the ePayments mode.

QUOTE 

(xi) RBI may take initiatives in promoting use of cards and electronic means of payment.

4.11 Alternate means of payment

RBI may take initiatives in promoting use of cards and electronic means of payment and encourage the installation of note detectors at places where large volume cash transactions are conducted.

4.10   Disincentivise the use of cash

Despite availability of various channels of payment systems, cash transactions form a major part of the Indian economy. It has to be recognized that processing of cash involves cost that has to be recovered. 

  

UNQUOTE

The Complete report can be accessed at

http://rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=554

            The Posts on this Blog are an attempt to attract more and more Indians to the ePayments fold.

ePayments are faster, inexpensive, environment-friendly. Of course, the Users need to be aware of the security precautions for ePayments.

Come, be familiar with ePayments

Irda allows e-payment for life insurance customers

Irda allows e-payment for life insurance customers

It is now official ePayment as a valid English Word, has been adopted by IRDA(Insurance Regulatory and Development Authority).

IRDA vide its Lr.dt.07/07/2009, to all CEO’s of Life Insurance Companies, has allowed Life Insurance Companies to , to remit  payments to all policyholders and beneficiaries through electronic payment methods such as ECS, NEFT Systems  as approved by the Reserve Bank of India.

The complete letter can be accessed at
http://docs.google.com/gview?a=v&q=cache:aI1HRd2OeIYJ:www.irdaindia.org/lifecirculars/E-payment-CIR090709.pdf+irda%2Bepayment&hl=en&gl=in

IRDA has taken a positive step towards popularizing ePayments, and the adoption of ePayments by Life Insurance Companies, will raise the confidence level of the general public in ePayments.

I believe that this is only the beginning and in near future IRDA will make it mandatory to remit the following payments through ePayment Mode only:-

01)    Commission to Agents.
02)     Payments to Vendors.
03)    Payments to Surveyors.

In fact, Commission to Agents/Payments to Surveyors by both Life and Non-Life Insurance Companies can directly be shifted to ePayments. The information required for ePayment is very easily available and as Agents/Surveyors are always in touch with the Insurance Companies, this information can effortlessly be collected.

Information required for a successful ePayment Transaction

a)    Beneficiary Name as per Bank Records.
b)    Beneficiary Bank Account Number.
c)    Beneficiary Bank IFSC Code.
d)    Beneficiary Bank Name.

ePayment volumes will rise substantially, if Insurance Companies are persuaded to shift majority of their payments from paper mode to E Mode.
 
Technology at the Insurance companies and the Banks is in place, only what is required is a small push from the Regulator i.e IRDA.

RTGS July 2009 Customer Outward Volumes

Today's Post is regarding RTGS July 2009 Customer Outward Volumes

01) The total volume increased by 113283 transactions and the % growth is 5.96%

The Top 10 Banks contributed 58% of the total transactions. All other banks contributed the remaining 42%

As usual State Bank of India, is the leader of the pack

Let  the volumes rise in August 2009

Cash Withdrawal from POS Terminals-Shops,Petrol Stations, Hotels-FREE OF CHARGE

Cash Withdrawal from POS Terminals-Shops,Petrol Stations, Hotels-FREE OF CHARGE

15 days has passed since RBI, has allowed withdrawal of cash through POS Terminals. It is early days, for the Program to go live. The first transaction, under this Program, is expected by the middle of next year i.e 2010.

It is relevant to note, that this Program is already up and running in other European/American countries, and therefore the basic technology is in place.

One important aspect, on which Reserve Bank of India is silent, is regarding the charges.
Maybe RBI, felt that the charges issue be determined by the market forces only.

Another important aspect is that RBI has made it clear, withdrawal of cash and purchases at the same store need not be clubbed.
The world over, cash withdrawal is clubbed together with purchases at the store.

This unique facet of the Notification, adds a new dimension to the IT to be deployed.
In my opinion, there should be the service should be FREE OF CHARGE.
The following are reasons:-

01)    Installation Cost of POS Terminal is very less compared to ATM.

02)    Operating Costs of POS Terminals are very less compared to ATM.
 

03)    Stores need not invest in additional space, manpower to offer this service.
 

04)    Through this service, stores can attract new customers.
 

05)    Through this service, stores can increase the ARPC(Average Revenue Per Customer)
 

06)    Through this service, Banks can increase the float in Current Accounts. POS Merchants have invariably the current account with the POS Terminal Banks.
 

07)     Through this service, Banks can increase the float in Savings Accounts. As a saving bank account holder, I will be willing to park my money in saving account, if I am sure, that I can withdraw anytime, anywhere. 
 

08)     At present, the Cash withdrawal from ATM’s is free in India. Hence, if a Service Fee is charged for Cash withdrawal from POS Terminals, customers will prefer to withdraw cash from ATM’s only.
 

09)    Pricing this service free, will enable customers to experience the magic of ePayments.
 

10)    Pricing the service free, will stimulate more transaction activity, in the cards, which will lower down the transaction costs.

Any more reasons, folks, for the Service to be FREE.

Visit http://prashantnepayments.blogspot.com/2009/07/emagic-withdraw-cash-from-pospoint-of_24.html

for my earlier post on this subject