RBI Considers Relaxing Electronic Fund Transfer Limits for T+1 Settlement System

Strategic Insights -

The Reserve Bank of India (RBI) is examining the possibility of removing or relaxing the limits on electronic fund transfer (EFT) and electronic clearing system (ECS) transactions to facilitate the introduction of the T+1 settlement system in the capital market. RBI deputy governor Rakesh Mohan stated that the removal or relaxation of limits on EFT and ECS transactions is under active consideration but will be implemented in a secure environment. The current limits for EFT transactions are Rs 20 million (US$431,000) per transaction, while ECS transactions have limits of Rs 500,000 and Rs 100,000 for credit and debit transactions, respectively. The RBI is considering these changes due to demands from capital market participants to review these limits.

Key Takeaways:

  • The RBI is considering removing or relaxing limits on electronic fund transfer (EFT) and electronic clearing system (ECS) transactions to facilitate the T+1 settlement system in the capital market.
  • The current limits for EFT transactions are Rs 20 million (US$431,000) per transaction, while ECS transactions have limits of Rs 500,000 and Rs 100,000 for credit and debit transactions, respectively.
  • The RBI deputy governor, Rakesh Mohan, stated that the removal or relaxation of limits on EFT and ECS transactions is under active consideration but will be implemented in a secure environment.
  • The demand for reviewing these limits is coming particularly from capital market participants.
  • RBI deputy governor Rakesh Mohan expressed concern over the difficulties faced by small and medium enterprises in accessing credit, citing that banks are slow in developing customer profiles via the use of technology.
  • Mohan emphasized that banks can reduce costs and increase volumes by leveraging technology, which would help in faster credit assessments and bring down the cost for such advances.
  • Mohan outlined that even in the Global Trust Bank moratorium, the RBI had to take into account the technology aspect, leading to the closing down of ATMs and restricting withdrawals only through branches.

Statistics:

  • Rs 20 million (US$431,000) is the current limit for EFT transactions per transaction.
  • Rs 500,000 is the limit for ECS transactions for credit transactions.
  • Rs 100,000 is the limit for ECS transactions for debit transactions.
  • (PTI) is the news agency that reported the RBI deputy governor Rakesh Mohan's statement.

Sources:

  • Asia Pulse (Aug 2)
  • PTI (PTI is not a date)