Compounding Authority Procedure Under Indian FEMA Act 1999

In this special column, Mr. B.S.Dalal, Senior Partner at Perry4Law and a Techno Legal Banking and Financial Expert, is discussing the current procedure for Compounding Of Contraventions Under Indian FEMA, 1999, as followed by the Compounding Authority.

Reserve Bank of India (RBI) has prescribed a set procedure to compound contraventions under the Indian Foreign Exchange Management Act (FEMA), 1999. It is a good option to set oneself free from legal wrongs without going through the lengthy and costly court and adjudication proceedings.

RBI master circular on compounding of contraventions under Indian FEMA 1999 has been recently issued. It prescribes a set procedure for compounding of contraventions under Indian FEMA 1999. The compounding authority (CA) can compound contraventions committed under the FEMA Act 1999 if an application has been duly made in the prescribed manner.

Once a complete compound application has been made by an applicant, the following procedure would be applied by the RBI:

(1) The CA will exercise jurisdiction in respect of the contraventions alleged to have been committed in relation to any of the provisions of the FEMA, 1999, or any rule, regulation, notification, direction or order issued in exercise of the powers under FEMA, 1999.

(2) The CA will form an opinion on the basis of the application, together with the documents submitted and on the basis of submissions made during the personal hearing on the nature of the contravention.

(3) The application for compounding will be disposed of on merits, upon consideration of the records and submissions and at the absolute discretion of the CA. The following factors, which are only indicative, may be taken into consideration for the purpose of passing the Compounding Order and for arriving at the quantum of sum on payment of which contravention shall be compounded:

(i) The amount of gain of unfair advantage, wherever quantifiable, made as a result of the contravention;

(ii) The amount of loss caused to any authority / agency / exchequer as a result of the contravention;

(iii) Economic benefits accruing to the contravener from delayed compliance or compliance avoided;

(iv) The repetitive nature of the contravention, the track record and / or history of non-compliance of the contravener;

(v) Contravener’s conduct in undertaking the transaction and disclosure of full facts in the application and submissions made during the personal hearing; and

(vi) Any other factor considered relevant and appropriate.

After this stage, the issuance of Compounding Order ensues. The procedure for issuance of a compounding order is as follows:

(1) An opportunity for personal hearing is given to the applicant for further submission of documents in person in support of the application within a specified period. If the contravener or its authorized representative fails to appear in person or make any submissions before the CA for personal hearing, the CA may proceed with the processing of the compounding application on the basis of information and documents available in the application for compounding.

(2) The Compounding Authority will pass a compounding order on the basis of the averments made in the application as well as other documents and submissions made in this context by the contravener during the personal hearings, if any.

(3) Where the compounding of any contravention is made after making of a complaint under sub-section (3) of section 16 of FEMA, 1999 as the case may be, one copy of the compounding order made under sub rule (2) of Rule 8 of Foreign Exchange (Compounding Proceedings) Rules, 2000 will be provided to the applicant (the contravener) and also to the Adjudicating Authority.

Procedure For Compounding of Contraventions Under Indian FEMA, 1999

In this special column, Mr. B.S.Dalal, Senior Partner at Perry4Law and a Techno Legal Banking and Financial Expert, is discussing the current procedure for Compounding Of Contraventions Under Indian FEMA, 1999.

The Reserve Bank of India (RBI) is one of the compounding authorities as per the provisions of Indian Foreign Exchange Management Act (FEMA), Act 1999. The Act empowers RBI for compounding of contraventions under the FEMA 1999. Now the RBI has issued a master circular pertaining to compounding of contraventions under the FEMA Act 1999.

While our previous posts have covered this aspect sufficiently, in this post I would like to discuss the procedure for compounding of contraventions under the FEMA Act 1999. The procedure is as follows:

(1) An application for compounding of a contravention under FEMA Act 1999 can be made to the Compounding Authority (CA) on being advised of a contravention under FEMA Act 1999, either through a memorandum or suo moto on being made or on becoming aware of the contravention. The format of the application is appended to the Foreign Exchange (Compounding Proceedings) Rules, 2000.

(2) The application must also furnish relevant details relating to Foreign Direct Investment, External Commercial Borrowings, Overseas Direct Investment and Branch Office / Liaison Office, as applicable, along with an undertaking that they are not under investigation of any agency such as DOE, CBI, etc. A copy of the Memorandum of Association (MOA) and latest audited balance sheet must also be attached while applying for compounding of contraventions under FEMA, 1999.

(3) All applications for compounding whether on the advice of the Regional Office concerned or suo-moto, relating to the contraventions mentioned at para 3 (a) and (b) above and up to the amount of contravention stated therein, may be submitted by the companies falling under the jurisdiction of the aforesaid Regional Offices to the Regional Office concerned, together with the prescribed fee of Rs.5000/- by way of a demand draft drawn in favour of “Reserve Bank of India” and payable at the concerned Regional Office.

Applications for compounding of all other contraventions together with the prescribed fee of Rs.5000/- by way of a demand draft drawn in favour of “Reserve Bank of India” and payable at Mumbai may be submitted to: The Compounding Authority, [Cell for Effective implementation of FEMA (CEFA)], Foreign Exchange Department, 5th floor, Amar Building, Sir P.M. Road, Fort, Mumbai- 400001.

(4) On receipt of the application for compounding, the proceedings would be concluded and order issued by the CA within 180 days from the date of the receipt of the application for compounding. The time limit for this purpose would be reckoned from the date of receipt of the completed application for compounding by the RBI. The CA may call for any information, record or any other documents relevant to the compounding proceedings and will hold the proceedings. The Compounding Order will be passed by the CA after affording the contravener and others concerned, an opportunity of being heard.

(5) The application will be examined based on the documents and submissions made in the application, in terms of sub rule (1) of rule (4) of the Foreign Exchange (Compounding Proceedings) Rules, 2000 and assess whether the contravention is compoundable and if so, the amount of contravention is accordingly quantified.

(6) The nature of contravention is ascertained keeping in view, inter alia, the following indicative points:

(a) Whether the contravention is technical and / or minor in nature and needs only an administrative cautionary advice;

(b) Whether the contravention is serious in nature and warrants compounding of the contravention; and

(c) Whether the contravention, prima facie, involves money-laundering, national and security concerns involving serious infringement of the regulatory framework.

However, the Reserve Bank reserves the right to classify the contraventions as stated above and neither the contravener nor others have any right to classify any contravention as technical suo moto.

(7) The disposal of the compounding application is made by issue of a Compounding Order specifying the provisions of FEMA,1999 or any rule, regulation, notification, direction or order issued in exercise of the powers under FEMA, 1999, in respect of which contravention has taken place.

(8) The CA may call for any additional information, record or any other document relevant to the compounding proceedings. Such additional information/ documents are required to be submitted within the period as may be specified by the CA and the application may be rejected if such information/documents are not submitted within the prescribed time.

(9) Where there is sufficient cause for further investigation, the Reserve Bank may refer the matter to the Directorate of Enforcement for further investigation and necessary action under FEMA, 1999, as deemed fit or to the Anti- Money Laundering Authority instituted under the Prevention of Money Laundering Act (PMLA), 2002 or to any other agencies, as deemed fit. Such applications will be disposed of by returning the application to the applicant.

Virtual Legal Due Diligence In India

International community is constantly looking forward towards using information and communication technology (ICT) for legal and judicial purposes. Whether it is establishment of electronic courts or use of technology for online dispute resolution (ODR), technology is increasingly being used for legal and judicial purposes.

The latest to add to this list are electronic legal due diligence, technology related due diligence and online legal due diligence. These concepts show the growing use of virtual legal due diligence for various legal and administrative purposes.

Parallel and simultaneous development in allied fields is also happening. For instance, use of data rooms for legal compliances and mergers and acquisitions in India and abroad is passing through a transformation stage. Virtual data rooms (VDRs) are replacing the traditional data rooms to facilitate cost effective and more efficient due diligence and merger and acquisition activities. In fact, virtual data rooms and legal compliances are increasingly seen as inseparable and more stress is given to perform virtual legal due diligence in India these days.

Virtual data rooms and virtual legal due diligence in India would also facilitate e-discovery in India. Presently, e-discovery services in India are still grooming. Some recent episodes have shown the importance of e-discovery for social media in India.

The techno legal issues of virtual legal due diligence in India must also be taken care of. There are many technical and legal requirements that must be met before virtual due diligence can be used for legal and administrative purposes. These techno legal requirements are also required to be fulfilled to escape various legal obligations and liabilities that may arise due to improper use of virtual data rooms.

Online Legal Due Diligence In India

Legal due diligence in India is passing through a transformation stage. Concepts like electronic legal due diligence in India and technology related due diligence in India are frequently heard in India these days.

Till now legal due diligence in India is mainly performed in a traditional manner. Physical storage of information and documents in the data rooms is the traditional method of making available information for due diligence and various legal purposes.

However, virtual data rooms (VDRs) have changed the entire scenario. Using data rooms for legal compliances and mergers and acquisitions in India and abroad is giving way to using VDRs for the same and many more legal and non legal purposes. Clearly, virtual data rooms and legal compliances in India are increasingly seen as inseparable and more stress is given to perform online legal due diligence in India these days.

VDRs and online legal due diligence in India would also facilitate e-discovery in India. Presently, e-discovery services in India are still grooming. Some recent episodes have shown the importance of e-discovery for social media in India.

However, we need privacy laws in India, data protection laws in India and data security laws in India to make online due diligence a success in India. Similarly, use of is also not desirable at this stage unless there are sufficient procedural, legal and technical safeguards at place. Cloud computing in India is still not trusted and most of the clouds computing service providers in India are not aware of the stringent laws of India that they frequently violate.

The cyber law trends in India 2012 by Perry4Law and Perry4Law Techno Legal Base (PTLB) have clearly projected that cyber law due diligence in India would going to increase. In fact cyber law due diligence for Indian companies has become so important that it must be made a part of their policies and corporate strategies. One thing that is inevitable in India is the use of online legal due diligence in India in the coming years.

Merger And Acquisition Trends In India 2011

In this special column, Ms. Geeta Dalal, Partner at Perry4Law and a Techno Legal Corporate and Business Restructuring Expert, is discussing the merger and acquisition trends of India in the year 2011.

Merger and acquisition has seen many ups and downs in the year 2011 and many crucial developments took place in 2011.

Corporate mergers and acquisitions (M & A) in India are very common. India has been updating its corporate merger and acquisition regulations in India from time to time. Recently, Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 were formulated by the by Competition Commission of India. The main objective of the same was to regulated the combinations formulated in an anti competition manner in India.

Regulatory environment touching mergers and acquisitions in India was also streamlined in the year 2011 and stress upon and technological developments were made. The Securities and Exchange Board of India (SEBI) is planning to use electronic initial public offer (IPO) in India. Foreign investments in pharmaceutical in India has been liberalised by Reserve Bank of India. Similarly, foreign direct investment (FDI) in India has also been liberalised in many crucial areas. Naturally, lots of investments, IPOs, private equity funds exchange and many more collaborative and cooperative activities would take place in India in the year 2012.

The year 2011 envisaged an attempt by Reserve Bank of India (RBI) to regulate banking related mergers and acquisitions (M&A) in India. With the clearance of the Banking Laws (Amendment) Bill, 2011 by the Parliamentary Standing Committee on Finance, this may be the reality very soon.

Further, to streamline the banking transactions, an integrated banking law in India has been proposed. Similarly, the cap upon mobile banking financial transactions in India has been removed by the RBI. These reforms would help merger and acquisition transactions in India in the coming years.

Although there was a slow down in the merger and acquisition deals in India in 2011 yet India’s energy, mining and utilities sector witnessed a sound growth. The telecommunication sector faced the biggest setback in India and there were very few M&A dealing in this sector in 2011.

Perry4Law and Perry4Law Techno Legal Base (PTLB) would come up with the projected or forecasted merger and acquisition trends in India 2012 very soon.

Banking Related Mergers and Acquisitions (M&As) in India

In this special column, Mr. B.S.Dalal, Senior Partner at Perry4Law and a Techno Legal Banking and Financial Expert, is discussing the current position of mergers and acquisitions in the banking sector of India.

Mergers and acquisitions (M&A) in India are governed by the various laws. The anti competitive nature of such mergers and acquisition is regulated by the competition commission of India under the competition act, 2002.

Till now all mergers and acquisitions related anti competition issues of banks are governed by the competition commission of India. However, Banking Laws (Amendment) Bill, 2011 has proposed a new section 2A that provides that “Notwithstanding anything contrary contained in Section 2 of the Banking Regulation Act, 1949, nothing contained in Competition Act, 2002, shall apply to any banking company, the State Bank of India, any subsidiary bank, any corresponding new bank or any regional rural bank or cooperative bank or multi-state cooperative bank in respect of the matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition under respective Acts.”

Through this amendment, the Reserve Bank of India (RBI) is trying to remove the scrutiny of competition commission of India over banking related mergers and acquisitions and keeping the same within its own jurisdiction and powers.

The Banking Laws (Amendment) Bill, 2011 was introduced in Lok Sabha on 22 March, 2011 and referred to Standing Committee on Finance for examination and report on 24 March, 2011. The Parliamentary Standing Committee on Finance of India has given a conditional nod for introduction of Banking Laws Amendment Bill 2011.

Before the Parliamentary Standing Committee on Finance, it has been suggested that the exemption of bank mergers etc. from the scrutiny of the competition commission of India (CCI) would allow RBI to approve bank mergers in public /depositors' interest, in the interest of the banking system in India and to secure the proper management of the banking company in a timely manner without waiting for approval of the CCI.

The Committee, while supporting the Government’s proposal to keep bank mergers etc., outside the purview of Competition Commission of India for the time being, recommended that this exemption should be considered as a special case and an expedient measure to be revisited in due course in the light of experience gained by both the regulators in question, namely the RBI and the Competition Commission of India. This however does not in any manner convey the Committee’s views on mergers or acquisition policy in banking sector as such, which is an issue meriting a separate discourse.

As Reserve Bank of India has been entrusted with the mandate to grant approval for acquisitions, transfer, mergers etc. in the banking sector, the Committee expect that the Reserve Bank of India would conduct due diligence of “fit and proper” persons/entities and take sufficient safeguards while stipulating conditions as to credentials, source of funds, track record, financial inclusion etc. before granting approvals under this clause.

The Committee also recommended that the Government can consider the merits of issuing non-voting shares as an avenue to expand the capital base of banks without allowing concentration of management control in a few hands and which would also enable them to grow faster.

The Committee also felt that as amendments are being proposed by Government frequently in banking law covering different aspects at different points of time, the Committee would recommend that the Government, instead of bringing piecemeal amendments, should consider formulating an integrated modern banking law for India, which will be comprehensive and will consolidate all related provisions and aspects of banking presently dispersed in different statutes. It may include such other fresh and forward-looking proposals reflecting emerging realities as may be considered necessary by the Government for inclusion in the integrated banking law.

Clearly, once the proposed amendments are passed, the mergers and acquisitions of banks will now come under the purview of the Banking Regulation Act. This means M&A in banking sector would no more require the approval of the Competition Commission of India.

Other banking related reforms are also in pipeline. The Government of India has recently passed a resolution for the constitution of Financial Sector Legislative Reforms Commission (FSLRC) of India. The main objective of constitution of FSLRC is to rewrite and harmonise financial sector legislations, rules and regulations. This had become necessary as the institutional framework governing India’s financial sector was built over a century and the same has become redundant for the contemporary requirements.

Some of the areas that FSLRC can analyse and consider pertain to merger and acquisition norms, non banking financial companies regulation, wealth management regulations, cyber security for banking and financial institutions, due diligence by banks and financial sectors of India, etc.

Non banking finance companies (NBFC) laws in India have also been streamlined by Supreme Court of India. A Bench consisting of Justice Markandey Katju and Justice Gyan Sudha Misra upheld the “constitutional validity” of such State laws and termed such laws as salutary measures which were long overdue to deal with scamsters.

Banking related mergers and acquisitions in India are heading for a big change and all those interested in the same must keep a close watch upon it.

Banks In India Are Not Providing Positive Confirmations Of NEFT Transactions

The national electronic fund transfer (NEFT) system of India is a mechanism that ensuring electronic fund transfer facility to banking customers in India. NEFT system is a good example of use of technology for effectuating banking transactions in India. The

Reserve Bank of India (RBI) has been issuing guidelines and instructions from time to time to streamline NEFT system in India. However, not all the directions of RBI pertaining to NEFT system are followed by banks in India.

For instance, RBI has in the past directed the banks to ensure positive confirmation to the originator regarding a successful NEFT transaction. However, banks are not following this direction of RBI. Reacting to the same, RBI has through the notification numbered RBI/2011-12/341 DPSS (CO) EPPD No.1199/04.03.01/2011-12, dated 5th January 2012, asked the banks of India to ensured that they must put 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.

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%. A positive confirmation is a unique feature of NEFT and has played a major role in popularising the system amongst the users. Non-adherence to instructions in this regard will undermine the customer service efficiency of the system.

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.

Banks have been advised to immediately report to RBI the existing status/process being followed by them for sending such messages, both as originator and receiver. Banks have also been 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 banks plan of action in this regard is required to be sent to RBI within 15 days of receipt of this notification 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).

National Electronic Funds Transfer (NEFT) System Of India: RBI Guidelines

Electronic fund transfer (EFT) is an easy and expeditious method of funds transfer from one place to another in India. In India, we have two primary methods of EFT for one to one transactions. These are real time gross settlement (RTGS) and the national electronic fund transfer (NEFT) systems.

The national electronic fund transfer (NEFT) system is a nation-wide system that facilitates individuals, firms and corporates to electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country. NEFT system was introduced in November 2005 and till now it has been significantly used in India. In fact, more than 6 million transactions were processed by the NEFT system during the month of January 2010 alone.

The NEFT system of India uses the Public Key Infrastructure (PKI) technology to assure end-to-end security and the Indian Financial Network (INFINET) to connect bank branches for electronic transfer of funds. In line with the system capabilities and user expectations, a number of initiatives have been taken in the recent past to extend operating hours, increase the number of batches and handle more transaction types. Incidentally, NEFT has no amount restrictions and accepts cash up to Rs. 50,000 for originating transactions.

Through a circular numbered BI/2009-10/305 DPSS CO EPPD No.168 / 04.03.01 / 2009-2010, dated 5th February 2010, the Reserve Bank of India (RBI) refined the process-flow and enhancement of features of NEFT system of India.

With a view to further strengthen the NEFT system in terms of availability, convenience, efficiency and speed, the following refinements to process-flow and enhancements to operational features are being introduced –

(i) Tightening of Return Window – Presently, the NEFT procedural guidelines mandate banks to return NEFT transactions in the very next available batch. The NEFT system has, however, been designed to allow destination banks to return transactions on a T+1 basis. The traffic analysis has revealed that a major chunk of returns are effected by banks either in the last batch of the day or in the first batch of the next day, indicating that the transactions are processed by the destination batches only at the end of the day instead of batch-wise. In order to streamline the system and complete the processing cycle on a near-real-time basis, the concept of return within two hours of completion of a batch is being introduced. The B+2 return discipline would require banks to afford credit to beneficiary accounts immediately upon completion of a batch or else return the transactions within two hours of completion of the batch settlement, if credits are unable to be afforded for any reason. Required changes in the SFMS / NEFT software has been carried out. Necessary changes are also being made to the Procedural Guidelines for the purpose.

(ii) Increase in Operating Hours – NEFT is currently available from 9 am to 5 pm on week days and from 9 am to 12 noon on Saturdays. There have been constant requests from various individual and business segments to elongate the operating hours. After examining the feasibility and customer benefits, it has been decided to extend NEFT operating hours from 9 am to 7 pm on week days and from 9 am to 1 pm on Saturdays. Member banks need to effect changes at their end to initiate and / or receive NEFT transactions taking full advantage of the increased hours of operation.

(iii) Move to Hourly Settlements – On date, NEFT has six batches of settlement at 9 am, 11 am, 12 noon, 1 pm, 3 pm and 5 pm on week days and three batches of settlement at 9 am, 11 am and 12 noon on Saturdays. An analysis of daily data has shown that the volume of transactions processed in batches that have a gap of two hours between batches is double the volume of transactions processed in batches that have only an hour’s gap between them. With a view to evenly space out transactions across batches, as also to make the system near-real-time, it has been decided to introduce the concept of hourly settlements. Accordingly, there would be eleven hourly settlements starting from 9 am to 7 pm on all week days and five hourly settlements from 9 am to 1 pm on Saturdays. Necessary changes have been carried out in the SFMS / NEFT software.

(iv) Implementation of Positive Confirmation – At present, the un-credited NEFT transactions are returned by destination banks and it is presumed that credit for all other transactions have been afforded to beneficiary accounts. In order to remove any ambiguity and to introduce the element of positive confirmation, the NEFT outward message format is being modified to contain two additional fields, wherein mobile number and / or e-mail address of the originating customer can be populated. A new message format is also being introduced to relay to the originating bank an acknowledgement containing the date and time of credit, immediately after the credit is afforded to beneficiary accounts. This message would flow from the destination bank / branch to the originating bank / branch. The originating banks after receiving the positive confirmation from the destination banks shall have to initiate a mobile SMS or generate an e-mail to the originator to convey the fate of the transaction. Detailed process flow for generating the positive confirmation is enclosed. SFMS / NEFT has been modified to add the required fields in the existing messages as also to handle the new messages.

The above modifications will be implemented in NEFT with effect from March 1, 2010. Member banks are advised to carry out appropriate changes to their CBS / system interfaces to handle the enhancements. In order to facilitate smooth migration, IDRBT-Hyderabad would release modified patches to be applied on SFMS / NEFT applications by February 15, 2010. For any additional information / clarifications, the NEFT team at the concerned bank can contact officials of DPSS or IDRBT through email.

The process flow of credit confirmation based on CBS banks and non-CBS banks is as follows:

A. CBS Implemented Banks

1. After successfully crediting the beneficiary account, CBS will send a Credit Acknowledgement (N10 message) to SFMS. On receiving the outward N10 message from receiver CBS, SFMS will update the status of respective transactions as “Credited to Customer”. The same outward Credit Acknowledgement (N10) will be sent to RBI Service centre (RBIP0NEFTSC). Outward N10 messages may contain transactions of different banks’.

2. On receiving N10 at RBI Service centre, NEFT segregates the N10’s bank-wise and sends to corresponding sending / initiator bank’s service centre through SFMS.

3. At the bank’s service centre, on receiving the inward N10 messages, corresponding transactions will be updated with the transaction status as "Credited to Customer" and will send the inward N10 to CBS. Finally, SFMS will send credit confirmation to the customer through SMS / e-mail according to the details provided in the field SMS / e-mail of debit transaction.

The CBS branches are provided with the interface to receive the positive acknowledgement from their CBS in a STP manner.

B. Non-CBS Banks

1. After successful crediting to the beneficiary account, the user in the beneficiary branch will initiate a credit acknowledgement by clicking a button provided in SFMS. This will update the status of respective transactions as “Credited to Customer”. An outward N10 message is created and sent to his bank’s service centre IFSC.

2. A new process in SFMS polls on database and consolidates the credit acknowledgements based on the “Credited to customer” status and sends a new outward N10 message to RBI service centre.

3. On receiving N10 at RBI Service centre, NEFT segregates the N10’s bank-wise and sends to corresponding sending / initiator bank’s service centre through SFMS.

4. On receiving the inward N10 messages at Sending bank’s service centre, NEFT will segregate the N10 messages branch-wise and will send them to Gateway à Sender branch IFSC.

5. On receiving the inward N10 messages at Sender branch, corresponding transaction status will be updated as "Credited to the Customer". Finally, SFMS will send credit confirmation to the customer through SMS / e-mail according to the details provided in the field SMS / e-mail of debit transaction.

The destination banks / branches which are non-CBS may use the SFMS / NEFT screen to create the N10 messages by clicking the appropriate button, similar to creating the return messages.

The originating bank will send the SMS / e-mail to the originator.

The SMS / e-mail will mention – “NEFT Transaction with reference number 123456789 for Rs. 999.99 has been credited on DD-MM-YYYY at HH:MM:SS”.

It is also intended to initiate SMS and / or generate e-mail to be sent to the originator for negative acknowledgements – i.e., for those transactions returned without offering credit to beneficiary accounts.

For the modified / new message format, banks may approach officials of DPSS or IDRBT through email.