Introduction: The International Financial Services Centres Authority (IFSCA) recently issued a crucial circular, IFSCA-FMPP0BR/12/2023-Banking, dated January 8, 2024. Addressed to all banking units, the circular focuses on enhancing the processing timelines of cross-border payments. In line with the powers vested in the Authority by the IFSCA (Banking) Regulations, 2020, the advisory outlines key recommendations for improving the efficiency of cross-border transactions.
Detailed Analysis:
1. Advisory Details: The circular, exercising powers under section 20 of the IFSCA (Banking) Regulations, urges International Banking Units (IBUs) to implement specific suggestions. These recommendations aim at reducing the time taken for processing cross-border payments.
2. Technological Upgrades: IBUs are advised to consider upgrading their messaging solutions for continuous transaction visibility. The incorporation of services like SWIFT GPI is recommended to enhance monitoring and processing efficiency.
3. Messaging Service Changes: IBUs utilizing SWIFT as their messaging service are encouraged to switch from MT 940 (Customer Statement message) to MT 910 (Confirmation of credit message). This change, subject to internal approval, aims to expedite the crediting of accounts for constituents.
4. Conducting Studies: The circular further directs IBUs to conduct a comprehensive study within one month. The study should document the existing methods of processing cross-border transactions and propose ways to further enhance processing speed. The findings are to be shared with the Authority via email.
Conclusion: In conclusion, the IFSCA’s advisory emphasizes the critical need for IBUs to optimize cross-border payment processing. The suggested technological upgrades and process changes underscore the Authority’s commitment to fostering efficiency in the financial services sector. IBUs are urged to promptly implement the recommendations and contribute to the overall enhancement of cross-border payment systems. This directive is a significant step towards streamlining international financial transactions and ensuring a more robust financial ecosystem.
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International Financial Services Centres Authority
Circular No. IFSCA-FMPP0BR/12/2023-Banking | Date : January 8, 2024
To
All Banking Units
Dear Sir/Madam,
Improving processing timelines of cross border payments – Advisory
1. In exercise of the powers of section 20 of the IFSCA (Banking) Regulations, 2020, the Authority hereby advises the IBUs to implement the suggestions in the paragraphs 2 and 3 below for the purpose of improving the time taken for processing cross border
2. IBUs may consider upgrading their existing messaging solutions so as to have continuous visibility of the status of a transaction by use of services like SWIFT GPI etc.
3. IBUs using SWIFT as messaging service may consider using MT 910 (Confirmation of credit message) instead of MT 940 (Customer Statement message) for crediting the accounts of its constituents after due internal approval of such change of process.
4. IBUs are further directed to undertake a study to document their existing method of processing cross-border transactions and how the speed of processing such transactions may be further improved. The study shall be conducted within a period of one month from the date of this circular and the findings shall be shared with the Authority by email to banking-queries@ifsca.gov.in.
Yours faithfully
(Supriyo Bhattacharjee)
Chief General Manager
Department of Banking Regulation and Development
