Hit by technical glitch for 12 hrs, RTGS, NEFT transactions restored at RBI

Transactions via National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS), which were affected for almost 12 hours beginning Monday midnight due to a technical glitch at the Reserve Bank of India, have been restored to normalcy. According to The Hindu Businessline, the problem seemed to have been encountered by Indian Financial Technology & Allied Services (IFTAS), a RBI subsidiary, when moving the disaster recovery site from one location to another.

“We are trying to complete the end-of-day for RTGS transactions of the previous day. The start-of-day for RTGS has not happened. NEFT transactions have now been restored,” a banker told Businessline on Tuesday, and added that normalcy in RTGS was expected to be fully restored.

NEFT is a nationwide payment system facilitating one-to-one funds transfer. Under this, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the scheme. There is no limit — minimum or maximum — on the amount of funds that can be transferred using NEFT.

Real Time Gross Settlement (RTGS) is a system where there is continuous and real-time settlement of funds transfers, individually, on a transaction-by-transaction basis. The system is primarily meant for large-value transactions. While the minimum amount that can be remitted through RTGS is Rs 200,000, there is no upper ceiling.

New intraday liquidity window for NEFT settlement from Monday, says RBI

From Monday, there will be another intraday liquidity facility to enable 24x7 settlement of funds under the national electronic funds transfer (NEFT) payment system, the Reserve Bank of India (RBI) said on Friday.

The RBI provides collateralised liquidity adjustment facility once a day — cut recently from two such facilities a few months back — and banks can borrow additional liquidity under an emergency window called marginal standing facility (MSF).

The central bank recently allowed round-the-clock transfer under NEFT, but banks raised doubts about the settlement issue. The RBI’s new window, exclusively for the settlement purpose, will ease the pressure significantly.

All banks will be eligible for the intraday facility, while the limit for such a facility would be set by the RBI from time to time, it said in a statement.

However, “the outstanding drawing at the end of the day under the LS (liquidity support) facility will be automatically converted into borrowing under the MSF”.

The MSF is done at a 25-basis-point higher spread than regular liquidity operations, which is done at the repo rate.

To give banks more flexibility and to facilitate their liquidity management, as an interim measure, the central bank also provided an additional fixed-rate reverse repo (in which it absorbs liquidity) and MSF (through which it lends at a slightly higher cost) window on all days.

24x7 fund transfers under NEFT from Dec 2019 to boost digital payments

With a view to boost digital payments, the Reserve Bank of India (RBI) will allow the National Electronic Funds Transfer (NEFT) payment system to operate on a 24x7 basis from December 2019. RBI Governor Shaktikanta Das said the move was expected to revolutionise the retail payments system of the country.

At present, the facility of NEFT — usually preferred for fund transfers of less than

Rs 2 lakh — is available between 8 am and 7 pm on all working days, except the second and fourth Saturdays of every month.

According to Mrutyunjay Mahapatra, managing director and chief executive of Syndicate Bank, the new process might require a standard operating procedure, which can be prescribed by the regulator, for seamless clearing and settlement of fund transfers among banks.

“Banks will need to tweak their back-end system. At present, they get a closure window between 11 pm and 4 am, for NEFT transactions. This process might involve a little higher operating cost,” said a senior banker, in-charge of digital banking in a public sector bank.

Last month, the RBI had scrapped the levy on online transactions such as NEFT and Real Time Gross Settlement (RTGS) to make fund transfers cheaper. Unlike RTGS, the NEFT process takes place in cycles, where transfers are done on a real-time basis.

24x7 fund transfers under NEFT from Dec 2019 to boost digital payments

RTGS is mostly used for transactions above Rs 2 lakh. The RBI added it will facilitate the creation of a central payment fraud registry for tracking payment system frauds.

Participants will be provided access to this registry for near real-time fraud monitoring.

The aggregated fraud data will be published to disseminate information on emerging risks.

Further, all categories of billers (except prepaid recharges), who provide for recurring bill payments, will be permitted to participate in the Bharat Bill Payment System (BBPS), an interoperable platform for repetitive bill payments, on a voluntary basis, the RBI said.

At present, BBPS currently covers biller segments like direct-to-home, electricity, gas, telecom and water bills. The central bank said a detailed guideline in this regard will be issued by September-end.

“Apart from digitisation of cash-based bill payments, these segments will also benefit from the standardised bill payment experience for customers, centralised customer grievance redress mechanism, prescribed customer convenience fee and the like,” the RBI said.