RBI's notification of 6th Feb 2008 lays down the instructions for the AD Category 1 banks of India for opening and maintaining the Vostro Accounts of Non-Resident Exchange houses in India. The complete notification is in the link below.
http://www.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=4046
Are the core banking applications that are implemented in the banks capable of handling all or most of the requirements specified in the notification? Can the application handle most of the requirements out of the box? What facilities would the banks want?
Please post your comments on what you feel. If you are working for a bank (either as an internal staff or as a support staff from vendors) please indicate if you are happy with the capability of your core-banking or payments application and what can be done to meet the expectation. Even if otherwise and you have expertise in this area please feel free to provide your comments.
Some of the salient features are:
1. Guidelines for Opening the Vostro Accounts: This includes RBI approval to be sought/Information to be provided to the RBI by the EH/Bank and verification of the antecedents of the EH by the bank, maintenance of authorized signatories and the nature of relationship. Verification of these details at every transaction.
2. Nature or Arrangements: RBI restricts the number of vostro arrangements to 20 and the number of drawee branches to 300 (RBI reserves the right to be lenient). Only those pre-arranged transactions are permitted on the accounts and specific debits are allowed on the Vostros. The list is as below:
a) Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.
b) Payments to families of Non-resident Indians.
c) Payments in favor of Insurance companies, Mutual Funds and the Post Master for premia / investments.
d) Payments in favor of bankers for investments in shares, debentures Payment to Coop. Housing Societies, Govt. Housing Schemes or
e) Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.
f) Payments of tuition/ boarding, examination fee etc. to schools, colleges and other educational institutions.
g) Payments to medical institutions and hospitals for medical treatment of NRIs / their dependents and nationals of Gulf Countries in India.
h) Payments to hotels by nationals of Gulf countries / NRIs for their stay.
i) Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines / rail, etc.
j) Trade transactions up to Rs. 2 lakhs per transaction.
k) No Cash transactions permitted.
3. Workflow for Credits and Debits and Collateral Arrangements: There can be no over-drafts on the Vostro accounts. However provisions are available to use DDA and other designated accounts (within the Drawee bank or in a reputed international bank for funding the Vostro accounts. Details of collaterals for mitigating operational and credit risks have been specified.
4. Reporting and Statements: The notification lists the reports and statements that need to be generated by the banks. This includes statements on the changes in the arrangements, statements of transactions, change in risk assessment etc.
http://www.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=4046
Are the core banking applications that are implemented in the banks capable of handling all or most of the requirements specified in the notification? Can the application handle most of the requirements out of the box? What facilities would the banks want?
Please post your comments on what you feel. If you are working for a bank (either as an internal staff or as a support staff from vendors) please indicate if you are happy with the capability of your core-banking or payments application and what can be done to meet the expectation. Even if otherwise and you have expertise in this area please feel free to provide your comments.
Some of the salient features are:
1. Guidelines for Opening the Vostro Accounts: This includes RBI approval to be sought/Information to be provided to the RBI by the EH/Bank and verification of the antecedents of the EH by the bank, maintenance of authorized signatories and the nature of relationship. Verification of these details at every transaction.
2. Nature or Arrangements: RBI restricts the number of vostro arrangements to 20 and the number of drawee branches to 300 (RBI reserves the right to be lenient). Only those pre-arranged transactions are permitted on the accounts and specific debits are allowed on the Vostros. The list is as below:
a) Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.
b) Payments to families of Non-resident Indians.
c) Payments in favor of Insurance companies, Mutual Funds and the Post Master for premia / investments.
d) Payments in favor of bankers for investments in shares, debentures Payment to Coop. Housing Societies, Govt. Housing Schemes or
e) Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.
f) Payments of tuition/ boarding, examination fee etc. to schools, colleges and other educational institutions.
g) Payments to medical institutions and hospitals for medical treatment of NRIs / their dependents and nationals of Gulf Countries in India.
h) Payments to hotels by nationals of Gulf countries / NRIs for their stay.
i) Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines / rail, etc.
j) Trade transactions up to Rs. 2 lakhs per transaction.
k) No Cash transactions permitted.
3. Workflow for Credits and Debits and Collateral Arrangements: There can be no over-drafts on the Vostro accounts. However provisions are available to use DDA and other designated accounts (within the Drawee bank or in a reputed international bank for funding the Vostro accounts. Details of collaterals for mitigating operational and credit risks have been specified.
4. Reporting and Statements: The notification lists the reports and statements that need to be generated by the banks. This includes statements on the changes in the arrangements, statements of transactions, change in risk assessment etc.
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