Providing Positive Confirmation to the Originator – Non-adherence to RBI Instructions

Last updated: 06 January 2012

Notice Date : 05 January 2012

RBI/2011-12/341

DPSS (CO) EPPD No.1199/04.03.01/2011-12

January 05, 2012

The Chairman and Managing Director / Chief Executive Officer

of member banks participating in NEFT / Indian Banks’ Association

Madam / Dear Sir,

Providing Positive Confirmation to the Originator – Non-adherence to RBI Instructions

Please refer to our circular DPSS CO EPPD No. 168 / 04.03.01 / 2009-2010 dated February 5, 2010 putting in place a mechanism which would enable NEFT participating banks to provide a positive confirmation to the remittance originator confirming the successful credit of funds to the beneficiary’s account. This modification was implemented in NEFT with effect from March 01, 2010 and banks were advised to confirm completion of necessary arrangements to ensure its implementation.

2. However, even though banks have had sufficient time for making necessary changes in their systems, it is observed that not all banks are sending such confirmations. In most cases, the bank that originated the remittance is unable to provide the confirmation to the originator / sending customer since they do not receive the corresponding confirmation message (N-10 message) from the beneficiary bank. Recent analysis shows that in respect of a large number of banks, the percentage of positive confirmation sent vis-a-vis inward messages received is lower than 10%. As you will appreciate, positive confirmation is a unique feature of NEFT and has played a major role in popularizing the system amongst the users. Non-adherence to instructions in this regard will undermine the customer service efficiency of the system.

3. It is once again reiterated that all banks should put in place systems to ensure positive confirmation is sent to the originator in accordance with our above mentioned circular. While it is expected that such confirmation messages are sent as soon as the beneficiary account is credited, it should not exceed beyond end-of-the-day under any circumstance.

4. Banks are advised to immediately report to us the existing status/process being followed by them for sending such messages, both as originator and receiver. Banks are advised to put in place suitable mechanisms immediately by which such confirmation will be sent for all inward / outward messages, if such systems are not already in place. A copy of your plan of action in this regard may please be sent to us within 15 days of receipt of this letter. The performance of banks in this regard will be monitored regularly and any deviation will be viewed seriously.

These directions are issued by Reserve Bank of India, in exercise of the powers conferred by section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Please acknowledge and advise compliance.

Yours faithfully

(Vijay Chugh)

Chief General Manager