Sunday, January 22, 2017

Access Criteria for Payment System


Purpose
These directions are issued for providing a framework, enabling Banks to apply for membership of payment systems and to provide a set of requirements related to payment systems.

General Guidelines
There will be two sets of access criteria
·        centralised payment systems( RTGS, NEFT,etc.) and
·        decentralised payment systems (Clearing Houses- CTS, ECCS, etc).

Membership to the centralised and decentralised payment systems will be open to all scheduled/ licensed banks. Unlicensed banks can participate as sub-members. Co-operative societies cannot be members.

Notified institutions like Post Office Savings Bank will be eligible for decentralised payment systems.

Primary Dealers will be eligible for RTGS membership. For clearing organisations/ PSPs and other entities, the RBI would consider membership on a case-to-case basis.

Access criteria will be reviewed once in two years.

Access Criteria
·        Minimum CRAR of 9% (as per the latest audited balance sheet);
·        Net NPAs below 5% (as per the latest audited balance sheet);
·        Minimum net-worth of  Rs.25 crore;
·        Availability of CBS / centralised processing at applicant’s end;
·        Recommendation of the regulatory / supervisory department.

The recommendations of the regulator/ supervisor will be obtained independently, and need not be furnished at the time of application.

Continuation in payment systems may be allowed on the recommendation of the regulator/ supervisor in case of any deterioration in the financials below the thresholds indicated above.

For new banks, no separate recommendation of the regulator/ supervisor would be obtained, if the bank has submitted its application before starting to provide services as banks.

SECTION III

Guidelines for membership to Centralised Payment Systems
Applications should be submitted to Reserve Bank of India, Mumbai.

The application should be in the prescribed format.

The entity on fulfilling the access criteria would be eligible for opening a
·        current account,
·        Subsidiary General Ledger /Intra Day Liquidity SGL account,
·        Negotiated Dealing System-Order Matching membership with RBI
Entities already having such accounts would need to mention the same while applying. Only RTGS members will be eligible to join NEFT.

Entities not having aforesaid accounts would need to apply at the time of application.

The operationalisation of the current/SGL/IDL-SGL account, NDS-OM/CALL membership & INFINET membership will be subject to the entity fulfilling the documentation and other formalities.

Entities not seeking access to centralised payment system but desirous of opening only a current account, SGL/Constituent SGL (CSGL) account, NDS-OM/CALL membership need not approach DPSS and can directly approach the concerned regional or central office of RBI.

The centralised payment systems would be regulated by RTGS System Regulations, NEFT Procedure Guidelines & other instructions issued by RBI.

Guidelines for membership to Decentralised Payment Systems
Applications for membership to decentralised payment systems should be submitted to the President of the concerned clearing house.

The application should be submitted in the prescribed format.

The admission of an entity to a clearing house shall be subject to its fulfilling Uniform Regulations and Rules for Bankers' Clearing House (URRBCH), guidelines and instructions issued by RBI.  

President of the clearing house will seek the clearance of the Regional Office (RO) of the RBI before granting membership.

The entity on fulfilling the access criteria would be eligible for opening
·        current account with RBI  
·        current account with settlement bank,

Operationalisation of the current account will be subject to the entity fulfilling the documentation and other formalities.

Banks which are already members of the centralised payment systems will be eligible for automatic membership of the decentralised payment systems across all clearing houses. Such banks would have to apply to the President of the Clearing House for operationalisation and will be subject to URRBCH.

Sub-membership facility

Sub-membership is an alternate mechanism to all scheduled/ licensed banks which are not participating in payment systems.

Centralised Payment Systems: The sub-member would participate in the centralised payment systems through their sponsor bank which is a direct member. Sponsor bank has to ensure the following:

Aspects relating to operational feasibility, risk mitigation, fund settlement, collaterals, etc., are to be taken care of by the sponsor bank before sponsoring.

The sponsor bank should have a board approved risk management framework and a system of continuous monitoring of risk management practices of sub-members.

The sponsor bank would be responsible for sending/ receiving the transactions & messages on behalf of their sub-members.

The settlement of transactions of sub members would take place in the settlement accounts of the sponsor bank. The sponsor bank will assume responsibility for the settlement of the transactions of sub-members.

The sponsor bank should ensure that their sub-members adhere to the guidelines of the centralised payment systems.

Redressal of customer complaints would be the responsibility of the sponsor bank. Sponsor bank should ensure that the sub-members have a mechanism to resolve customer complaints as per the guidelines of the centralised payment systems.

All disputes between the sponsor bank and the sub-members will be handled bi-laterally amongst them.

Branches of sub-members that are not under CBS shall be kept out of the centralised payment systems.

The sponsor bank should immediately inform RBI of:

·        any involvement of its sub-members in any suspicious transactions, frauds, etc.;
·        any of its sub-members resorting to any unfair practices;
·        any of its sub-members not adhering to the guidelines of the system.

The sponsor bank is not required to take prior approval of the RBI for sponsoring or cessation of its sub-members. However, it should immediately inform RBI of such action.

The charges for customer transactions of sub-members cannot exceed the charges applicable to customers of sponsor banks/direct members of the centralised payment systems viz., RTGS and NEFT.

Decentralised Payment Systems: The sub-members would participate in the decentralised payment systems through their sponsor bank subject to the of URRBCH

Review of Membership

Once an entity is admitted as a member, it will generally continue to be a member so long as it is
·  permitted to accept deposits or
·  its participation is not found to be detrimental to the functioning of the system
·  its membership is not suspended/ revoked/ terminated.

RBI will have the authority to determine if a member can continue to participate in payment systems.

Where concerns have been expressed on the financial conditions of an entity, RBI could initiate measures like limits on presentations by such entities in the clearing house. Such limits would be decided in consultation with the concerned regulator/ supervisor/ President of the clearing house.

In the event of an entity which has access to payment systems, being subsequently debarred from the payment systems or downgraded, the continuation of other accounts/ membership will be decided by RBI separately.
Based on RBI Master Direction dated 17th January 2017. For further clarification in the matter please refer www.rbi.org.in

 

Tuesday, January 17, 2017

Evidence of Import under Import Data Processing and Monitoring System (IDPMS)



Bill of Entry (BoE) data is received in IDPMS from
·        Customs Department for EDI ports,
·        NSDL for SEZ every day and
·        AD Category – I bank for non-EDI ports

It has now been decided to discontinue submission of hardcopy of BoE, with effect from December 01, 2016.

The revised procedures are as below:

AD Category – I bank will enter BoE details and download the BoE message data from IDPMS. Thereafter, match and settle the BoE data with Outward Remittance Message (ORM) as per the message format “BOE Settlement” in IDPMS. Multiple ORMs can be settled against single BoE and also multiple BoE(s) can be settled against one ORM.

In case of imports on ‘Delivery against Acceptance’ basis, AD Category – I bank shall verify the evidence of import from IDPMS at the time of remittance.

On settlement of ORM with import, bank shall issue an acknowledgement slip to the importer containing the following details:

·        importer's full name and address with code number ;
·        number and date of BoE and the amount of import; and
·        a recap advice on number and amount of BoE and ORM not settled.

The importer needs to preserve the printed ‘Importer copy’ of BoE and acknowledgement slip for future use.

The extant instructions and guidelines for Evidence of Import in Lieu of Bill of Entry will apply mutatis mutandis. The evidence of import will be created and uploaded by AD Category – I bank of the importer in the form of BoE data as per message format “Manual BOE reporting” in IDPMS.

Follow-up for Evidence of Import : AD Category – I banks shall continue to follow up for outward remittance made for import. In case evidence of import data is not available in IDPMS on due dates against the ORM, AD Category – I bank shall follow up with the importer for submission of documentary evidence of import. Similarly, if BoE data is not settled against ORM within the prescribed period AD Category – I banks shall follow up with the importer in terms of extant instructions.

Verification and Preservation: Internal inspectors and IS auditors should carry out verification and IS audit and assurance of the “BOE Settlement” process in IDPMS. Data and process followed by AD Category –I bank for “BOE Settlement” should be preserved as per prevailing guidelines. However, in respect of cases which are under investigation by investigating agencies, the data, process and documents may be destroyed only after obtaining clearance from the investigating agency concerned.
 Based on the RBI notification dated 12/01/2016. For any further clarification, please refer www.rbi.org.in ……………….Poppy

Friday, December 9, 2016

Aadhaar-based Authentication for Card Present Transactions



Banks were advised to ensure that all new cards are enabled to allow Aadhaar-based biometric authentication also with effect from 1/1/17. This date has now been revised to 30/06/17. The timeline for allowing Aadhaar-based biometric authentication in existing card will be advised in due course.
Based on RBI circular dated 02/12/2016. For further clarifications please refer www.rbi.org.in ……….. Poppy