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Date : Nov 04, 2005
Electronic Funds Transfer System Procedural Guidelines

Section - 1: Introduction

Section - 2: Definitions

Section - 3: Participants

Section - 4: EFT Process Flow

Section - 5: Inter-Bank Funds Settlement

Section - 6: Computer and other Technology Considerations

Section - 7: Security Aspects

Section - 8: Rights and Obligations

Section - 9: Claims, Allocation of Loss and Dispute Resolution

Section - 10: Miscellaneous






1.1 Reserve Bank of India shall introduce a system called 'The Reserve Bank of India Electronic Funds Transfer System - 1997' which may be referred to as 'RBI EFT System' or 'System' and shall include the set of procedural guidelines detailed hereunder, participating banks and institutions and the system of computer and communication network through which funds transfer operation would take place.


1.2 The objects of the RBI EFT System are :

(1) to establish an Electronic Funds Transfer System to facilitate an efficient, secure, economical, reliable and expeditious system of funds transfer and clearing in the banking sector throughout India, and

(2) to relieve the stress on the existing paper based funds transfer and clearing system.


1.3 The System would cover centres viz. Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanantpuram. Reserve Bank of India (to be referred to as Reserve Bank, herein after) may extend the System, in phases, to other commercially important cities in India.


2.1 In these Procedural Guidelines, unless the context otherwise requires:

(a) 'Acceptance' means execution of payment order.

(b) 'Bank' means a banking company as defined in Section 5 of the banking Regulation Act, 1949, and includes the State Bank of India, constituted by the State Bank of India Act, 1955, a Subsidiary Bank constituted under the State Bank of India (Subsidiary-Banks) Act, 1959, a Corresponding New Bank constituted under the Banking Companies (Acquisition and Transfer of Under-taking) Act, 1980, a co-operative bank, as defined in Section 56 of part V of the Banking Regulation Act, 1949 and such other banks as may be specified from time to time.

(c) 'Beneficiary' means the person designated as such, and to whose account payment is directed to be made in a payment order.

(d) 'Beneficiary bank' means the branch of the bank identified in a payment order in which the account of the beneficiary is to be credited.

(e) 'EFT' means Electronic Funds Transfer.

(f) 'EFT Centre' means any office designated by the Nodal Department in each of the centres to which EFT system is extended, for receiving, processing and sending the EFT data file and the debiting and crediting of accounts of the participating banks and institutions for settlement of payment obligations or one or more of these functions. EFT Centre is referred to as 'Sending EFT Centre' when it receives EFT data file from the participating sending banks and institutions. EFT Centre is referred to as ';Receiving EFT Centre'; when it receives EFT data file from a sending EFT center.

(g) 'EFT Data File' means an electronic data file of a batch of payment orders for funds transfers, processed and consolidated in the manner specified for transmission of consolidated payment orders and communications concerning payment orders from EFT service branch to the EFT centre. Similar data files between EFT Centres shall be referred to as 'RBI Data File'. The processed file to be transmitted by the EFT Centre to the service branches shall be referred to as 'NCC Data File'.

(h) 'EFT' Service Branch' means an office or branch of a bank or institution in a centre designated by that bank or institution to be responsible for processing, sending or receiving EFT data file of that bank or institution in that Centre and to do all other functions entrusted to an EFT service branch by or under these Regulations. EFT Service Branch is referred to as 'Sending EFT Service Branch' when it originates an EFT Data File for Funds Transfer. EFT Service Branch is referred to as 'Receiving EFT Service Branch' when it receives EFT Data File from Receiving EFT Centre.

(i) 'EFT' System' means the Electronic Funds Transfer System established by these Regulations for carrying out inter bank and intra-bank funds transfers within India, through EFT centres connected by a network, and providing for settlement of payment obligations arising out of such funds transfers, between participating banks or institutions.

(j) 'Execution' of a payment order in relation to a sending bank means the transmission or sending of the payment order by it to the EFT Service Branch; in relation to a Service branch it means transmission of the consolidated payment order in the encrypted EFT data file to the sending EFT center; in relation to the sending EFT Centre it means the transmission of the payment orders to the receiving EFT Centre; in relation to the receiving EFT Centre, it means the transmission of the payment order to the receiving EFT Service Branch and in relation to the beneficiary's bank, it means the crediting the beneficiary's account.

(k) 'Funds Transfer' means the series of transactions beginning with the issue of originator's payment order to the sending bank and completed by acceptance of payment order by the beneficiary's bank for the purpose of making payment to the beneficiary of the order.

(l) 'Institution' means a public financial institution and includes a department or agency of the Central or State Government or any other organization approved by the Reserve Bank as eligible to open a settlement account with it.

(m) 'Nodal Department' means the Department of Payment and Settlement Systems of Reserve Bank which is responsible for implementation, administration and supervision of the EFT System.

(n) 'Notified' means communicated electronically or in writing.

(o) 'Originator' means the person who issues a payment order to the sending bank.

(p) 'Participating Bank or Institution' means a bank or as the case may be an institution admitted for participating into the EFT System pursuant to Paragraph 3 of these Guidelines and whose Letter of Admission has not been cancelled .

(q) 'Payment Order' means an unconditional instruction issued by an originator in writing or transmitted electronically to a sending bank to effect a funds transfer for a certain sum of money expressed in Indian rupees, to the designated account of a designated beneficiary by debiting correspondingly an account of the originator.

® 'Public Financial Institution' shall bear the meaning assigned to it in Section 4A(1) of the Companies Act, 1956 and includes an institution notified under Sub-section(2) of the Section.

(s) 'Public sector bank' means State Bank of India, constituted by the State Bank of India Act, 1955, subsidiary Banks constituted under the State Bank of India (Subsidiary Banks Act, 1959, the banks constituted under Section 3 of the Banking Companies (Acquisition an Transfer of undertaking) Act, 1970 and the Banks constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980.

(t) 'Reserve Bank' means the Reserve Bank of India established under the Reserve Bank of India Act, 1934 (2 of 1934).

(u) 'Security Procedure' means the set of procedural guidelines at Paragraphs under Section of these Guidelines for the purpose of.

(i) verifying that a payment order, a communication canceling a payment order or an EFT Data File is authorised by the person from whom it purports to be authorized; and

(ii) for detecting error in the transmission or the content of a payment order, a communication or an EFT Data File.

(v) 'Sending bank' means the branch of a bank, maintaining an account of and to which payment order is issued by the originator. When the originator is a participating institution, reference to sending bank shall be construed as referring to the sending EFT centre.

(w) 'Settlement Account' means an account maintained by a participating bank or institution for the purpose of settlement of payment obligations under EFT Systems.

(x) 'Valid Reasons of Non-payment' are the reasons listed as under due to which beneficiary bank fails to make payment to the beneficiary. The reasons are :

a) Beneficiary not having an account with the beneficiary bank

b) Account Number or account name indicated in the payment order not matching with the number or name as recorded at the beneficiary bank.

c) dislocation of work due to circumstances beyond the control of the beneficiary bank such as earth quake, fire etc. at the place where the beneficiary's account details are maintained etc.


Admission necessary for participation

3.1 No persons shall be entitled to effect a funds transfer in the EFT System, unless the sending bank or institution and the beneficiary bank or institution as the case may be, is admitted for participation in the EFT System.

Eligibility for admission as a participant

3.2 To be eligible to apply for admission, an applicant must

1) be a bank or institution,

2) have attained and continues to comply with capital adequacy norms, if any, applicable to it.

3) is willing and able to comply with the technical operational requirements of EFT System,

4) be approved by the Reserve Bank as eligible to maintain a settlement account with it.

Provided that, having regard to the pattern of ownership and such other relevant factors, all or any of the above conditions may be relaxed or dispensed with, if so decided by the Governor.

Procedure for Admission

3.3 Any bank or institution eligible to be admitted in the EFT System may submit to the Nodal Department, duly authenticated application in triplicate, containing full particulars in the form specified at Annexure-I (Form: FT-IA). Every application shall be accompanied by an undertaking in the specified form to abide by the Procedural Guidelines in the event of admission.

3.4 The Nodal Department shall issue Letter of Admission as specified in Annexure-II (Form: FT-IB) to every bank or institution admitted into the EFT System.

3.5 A directory of participating banks and institutions shall be prepared as on 31st December of each year and supplied to every bank and institution either on floppy or on the network. Additions and deletions in the directory may be notified from time to time.


3.6 If a participating bank or institution has defaulted in meeting its settlement obligations or paying any charges or fees or complying with any procedural guidelines or for any reasons specified at paragraph 3.15, the Letter of Admission issued to it is liable to be kept under suspension for such period as may be specified in the order of suspension.

3.7 Every order of suspension shall be notified immediately to all the participating banks and institutions including a bank or institution against which the order of suspension is passed.

3.8 An order of suspension may be reviewed and may be revoked at any time by the Governor upon representation received from the concerned bank or institution or on his own. Every revocation shall be notified immediately to all participating banks and institutions.

3.9 A participating bank or an institution shall not, while any order of suspension is in force against it, be entitled to send or receive any EFT data file or otherwise to effect any funds transfer in the EFT System.

Provided that a suspension shall not affect the obligations of the suspended bank or institution, whether incurred before or after the suspension.


3.10 Any participating bank or institution may, by giving a notice of one month, withdraw from the EFT System.

3.11 No notice under this Regulation shall be effective unless it is given in writing and before the expiry of one month from the date of receipt of notice by the Nodal Department.

3.12 Notwithstanding its withdrawal, a bank or institution shall discharge all its payment obligations arising out of fund transfers attributable to it, whether effected before or after the withdrawal became effective.

3.14 The withdrawal of any participating bank or institution shall be notified to all the participating banks and institutions.

Cancellation of Letter of Admission

3.15 A Letter of admission issued to any bank or institution may be cancelled by the Governor on his being satisfied that such bank or institution has -

i) defaulted in complying with any Regulations or procedural guidelines issued there under from time to time.

ii) been placed under an order of moratorium or an order prohibiting acceptance of fresh deposits or an order of winding up or in respect of which a provisional liquidator has been appointed.

iii) stopped or suspended payment of its debts.

iv) failed to get the order of suspension passed against it under Regulation 8 revoked within a period of three months from the date of order of suspension.

v) has conducted its transactions in the EFT System in a manner prejudicial to the interest, integrity or efficiency of the System.

3.16 No order of cancellation shall be passed without first giving an opportunity of hearing to the concerned bank or the institution.

3.17 Every order of cancellation shall be notified to the concerned bank or institution and also to all other participating banks and institutions in the EFT System.

3.18 Notwithstanding the order of cancellation of Letter of Admission passed against it, such bank or institution shall discharge all its payment obligations arising out of the funds transfers effected in the EFT System.


4.1 The parties to a funds transfer under this EFT System are the sending bank, the sending service branch, the sending EFT centre, the receiving EFT centre, the receiving service branch at the beneficiary bank.

Request for EFT by bank customer

4.2 A bank customer (i.e. sender or originator) willing to avail of the remittance facilities offered by a sending bank shall submit an 'EFT Application Form' authorising the sending bank to debit the sender's account and transfer funds to the beneficiary specified in the EFT Application Form.

4.3 Each participating bank/institution may design the format of 'EFT Application Form'. A model EFT Application form is given at Annexure-III (Form: FT-2A).

4.4 The sender's request for transfer of funds shall contain no condition other than date on which funds transfer process should be initiated.

4.5 The relationship between the customer (i.e. sender) and the sending bank will be governed by an Agreement to be executed between them. The Agreement shall govern every payment order issued by the customer during the period of validity of the Agreement. A Model Customer Agreement is given at Annexure-IV (Form-2B).

4.6 The value of each EFT transactions shall be for whole rupee only. This stipulation may be clearly indicated on the EFT Application Form.

4.7 The upper limit for individual EFT transaction or payment order shall be fixed by the Nodal Department. As of now, there is no upper limit for individual transaction.

4.8 A transaction within the EFT system will be said to have been initiated when the sending bank accepts a payment order issued by the sender by issuing a 'receipt' indicating the date of initiating funds transfer operation and the likely date on which the beneficiary bank may make payment to the beneficiary.

4.9 If in a single payment instruction, the sender directs payments to several beneficiaries, each payment direction shall be treated as a separate payment order.

4.10 A bank branch may reject a customer's request for funds transfer when, in the opinion of the remitting branch,

i) the customer has not placed funds at the disposal of the sending bank; or funds placed is not adequate to cover the sum to be remitted and the service charge; or

ii) the beneficiary details given in the EFT Application form are not adequate to identify beneficiary by the beneficiary bank. The essential elements of beneficiary's identification are :

Beneficiary's Name :

Centre name :

Beneficiary Bank Name :

Beneficiary branch Name :

Beneficiary's Account Type :

Beneficiary's Account No. :

4.11 the sending bank shall prominently display at its premises the cutoff time upto who shall receive the EFT Application Forms from its customers.

EFT Scroll

4.12 The sending bank would consolidate the applications received till the cutoff time and forward the EFT Application Forms to its Service Branch with a copy of EFT Scroll. Scroll would contain only the key information pertaining to individual transactions. The model format of the EFT Scroll is given at Annexure-V (Form: FT-2c).

Data Entry at Sending EFT Service Branch

4.13 The sending EFT service branch shall prepare EFT Data File by using the soft package supplied by the Nodal Department. Control procedure should be developed by the sending bank to ensure accuracy in data entry with reference to the data elements furnished in EFT Application Forms/EFT Scroll and inclusion of all relevant transactions in data entry. After EFT Data File is created, the Service Branch should generate Final Listing of Outward Transactions (Report No.EFTR-1A) which would indicate the final position of data transmitted to EFT centre.

Data Entry at sending bank level

4.14 If a participant decides for decentralised data entry at the branch level, there may not be need for movement of much paper documents from the sending bank (i.e. sending branch) to its service branch except for some control reports.

4.15 For decentralised data entry at the branch level, participants themselves would have to develop appropriate software for data entry. The record layout of the EFT Branch Outward file to be created at the branch is given at Annexure-VI. The data file created at the branch shall be transmitted through a network or sent on a floppy diskette to the service branch. The procedure for data transmission may be worked out by the participating banks/institution. It is recommended that the data file shall be encrypted and if sent through a floppy, should preferably be accompanied by a paper listing/scroll of the transactions contained in the floppy.

4.16 The data file prepared at the branch level will be merged with the data file prepared at the service branch. While merging the data, the service branch would have an opportunity to verify the data with reference to the paper listing/scroll received from branches.

National Clearing Cell (NCC) to function as EFT Centre

4.17 At centres where Reserve Bank has National Clearing Cell (NCC), the data processing functions pertaining to 'EFT Centre' shall be discharged by the NCC.

Transmission/Submission of EFT Data File to the EFT centre

4.18 The remitting service branch shall transmit the EFT Data File to the EFT centre by using the communication network designated by Reserve Bank.

4.19 INFINET will be the designated network. Sending EFT Service branches of the participating bank/institutions, with prior arrangement with NCC, may transmit the EFT Data File through dial-up if transmission through INFINET becomes difficult.

4.20 Participants may be allowed by NCC, on NCCs discretion, to submit the EFT Data File on floppy on a temporary basis.

4.21 Data transmission on network or submission of floppy diskette shall be followed by or accompanied by a Control Statement on the hard copy as per format at Annexure-VII (Form FT-3A) and Annexure-VIII (Form FT-3B).

Form FT-3A if EFT Data File is sent on a floppy.

Form FT-3B if EFT Data File is sent through RBINet.

This Statement would indicate the number and value of transactions having a bearing on funds settlement at Reserve Bank and would serve as an authorisation to Reserve Bank for debiting its current account and transmit the EFT transactions. This would also help the EFT Centre to reconcile the EFT Data File received through the network by comparing the number and value of transactions reported through FT-3A/FT-3B with the number and value of EFT transactions contained in the EFT Data File.

'NIL' Statement by the participants with no EFT Data File

4.22 If a participant has no EFT Data file (neither a fresh outward transaction nor an acknowledgement), it shall send a 'NIL' statement as per format at Annexure-IX (Form FT-3C) for Remitting NCCs information. If 'NIL' report is sent through RBInet, hard copy is not required to be sent.

Acknowledgement of receipt of EFT Data File by the EFT centre

4.23 For the data files transmitted by sending EFT service branch through RBInet, the RBInet network software would generate an acknowledgement (specimen at Annexure-VIII) signifying the fact of receipt of EFT Data File by the sending EFT centre (i.e. sending NCC).

4.24 Sending EFT service branches will also get back the FT-3A/FT-3B duly certified by sending NCC as 'RECEIVED EFT DATAFILE' with the rubber stamp of NCC.

4.25 Before issuing the 'RECEIVED EFT DATA FILE' certificate on FT-3A/FT-3B forms, NCC will make sure that the data file is put to validation tests and found acceptable for further processing. Apart from encryption/decryption key matching, total number and value of transaction reported on FT-3A or FT-3B Form would be matched with the total of transactions reported on floppy/RBInet file. If the EFT Data File fails the validation tests, the same would be rejected and the remitting bank would be advised immediately indicating the reason for rejection.

Cut-off Time for receipt of EFT Data Files

4.26 Nodal Department shall prescribe a cut-off time by which the sending EFT service branches will upload the EFT Data File to the network. In the case of submission of data file on floppy diskette, the cut-off time shall refer to the time upto which floppy diskettes would be received at the floppy receiving counter at NCC.

4.27 Till further advised, the cut-off time shall be 11.30 p.m. and 2.30 pm on week days. On Saturdays, EFT centre it will be 11.30 pm.

Transmission/Submission of EFT Data File more than once in a day

4.28 Each participant would be permitted to submit only one EFT Data File for a batch. The EFT Data files received later would be ignored. . Two settlements would be conducted at 12.00 noon and 3 pm on week days and 12.00 noon on Saturdays.

Transmission of RBI Data File by Remitting NCC to Destination NCC

4.29 Immediately after the cut-off time, the sending NCC (i.e. sending EFT centre) shall consolidate the EFT Data Files received from remitting banks, sort them centre-wise and transmit the centre-wise files generated by the EFT software to the respective receiving NCCs (i.e. receiving EFT centres). These files called 'RBI Data File' shall be encrypted with the keys exchanged between the sending NCC and the receiving NCC. Sending NCC shall also ensure that the RBI Data File is transmitted to the receiving NCCs the same day. RBI Data File would also be created for the remittance transactions meant for banks at the local centre. This Data File would be used by NCC while playing the role of receiving NCC to process the inward remittances.

NCC Listing of Outward Transactions

4.30 After consolidating all EFT Data File received from the participants, the NCC shall supply to each participant 'NCC Listing of Outward Transactions'. This Report (Report No.EFTR-1B) would list key data elements of transactions reported in EFT Data File. This report would be made available to the participants in the morning of the next working day. The Sending EFT service branch shall compare this report with EFTR-1A generated earlier at the service branch while transmitting the EFT Data File. It shall bring to the notice of sending NCC discrepancies, if any, in the EFTR-1B report the same day.

Data Processing at receiving NCC (i.e. receiving EFT Centre)

4.31 Receiving NCC (i.e. receiving EFT centre) will wait for the RBI Data File from all other EFT centres. After the cut-off time (to be fixed by the Nodal department) on the same day, the receiving NCC would consolidate the RBI Data Files received from all NCCs and thereafter, sort the consolidated data file beneficiary bank and branch-wise. Each beneficiary bank with at least one inward remittance transaction would have an NCC Data File.

Receiving NCC transmitting NCC Data File to the beneficiary banks

4.32 NCC Data files generated for the banks will be transmitted by receiving NCC to the respective beneficiary banks through the RBInet network the same night. The beneficiary banks may collect the data file through the network after 5.00 a.m. in the morning.

4.33 NCC will treat the acknowledgement issued by the network software as a confirmation of receipt of the NCC Data File by the service branch of the beneficiary bank.

Collecting NCC Data File from NCC on floppy

4.34 Participants allowed to receive the NCC Data File on floppy will collect their floppies in the morning from the Delivery Counter of NCC. For convenience, the representative collecting MICR cheques in the morning from NCC may also collect the floppy. The Identity Card of the representative will be checked while delivering the floppies. NCC will not hand over the floppy to the representative without a valid identity card.

Data validation at receiving EFT Service Branch

4.35 On receipt of the NCC Data File, the receiving EFT service branch shall first validate the file using the validation routine provided in the EFT package. Apart from the validation with reference to the encryption key exchange with local NCC and checksum total for the contire file, the package would validate the individual records as well. This routine would generate a Validation Report (EPTR-2A) which would indicate the validation status of every transaction.

Daily Audit Report of NCC Data File

4.36 After the data validation goes through, the receiving EFT service branches should verify the accuracy of the NCC Data File by comparing EFTR-2A report with the 'NCC Listing of Inward Transactions' (Report No.EFTR-2B) supplied by local NCC. Therefore, it is necessary for participants to collect EFTR-2B report from local NCC.

4.37 The transactions which would fail validation test and are indicated as 'INVALID TRANSACTION' in the EFTR-2A Report would have to be sent back by the receiving EFT service branch as 'Rejected Acknowledgement'. Only valid transactions would be used for generating branch-wise credit advices.

Supply of Credit Reports/Advice to the branches of beneficiary banks

4.38 Using the software package, the receiving EFT service branch would be able to generate destination branch-wise credit reports (Report No.EFTR-4). This Report may be generated in duplicate, preferably by using carbonised continuous stationery. The Reports shall be signed by an authorised official of the destination service branch. This report (in duplicate) may be forwarded to the branches along with MICR clearing reports. EFTR-4 Report would bear a legend as 'Print No.1' when it is printed for the first time.

Advising branches through network/floppy diskette

4.39 If a participant has opted for decentralised report generation facility at the time of installation of EFT software package, the package would at the time of inward processing, generate a file that can be used for preparing branch-wise inward data file. File description of the generated file is given at Annexure-XI. Software package for generating branch-wise file would have to be developed by such participants themselves.

4.40 If a participant opts for decentralised report generation facility, the participant concerned may develop suitable control procedure for ensuring authenticity and integrity of data transmission to individual branches.

Payment to beneficiary by the beneficiary bank

4.41 The branches would make payment to the beneficiaries on the same day (i.e. Day-Two of EFT cycle, Day-One being the day of data processing at the sending NCC) by crediting the specified account of the beneficiary or otherwise placing funds at the disposal of the beneficiary.

Revocation of Payment Order

4.42 A payment order issued for execution shall become irrevocable when it is executed by the sending bank. Any revocation, after the payment order is executed by the sending bank shall not be binding on any other party in the EFT system.

Issuance of acknowledgement by the beneficiary bank

4.43 The beneficiary bank shall issue an acknowledgement for having made payment to the beneficiary by returning the duplication of the Branch-wise Credit Report (Report No.EFTR-4) along with the EFT Scroll of the day. The duplicate copy would contain remarks 'Accepted' or 'Rejected' against every transaction and should be signed by the authorised signatory. A fresh Acknowledgement Serial No. may be indicated against every entry. Amount against the rejected items shall be circled for easy identification. The total number and value of rejected acknowledgement shall be totaled and incorporated in the EFT Scroll. Accepted acknowledgement will not figure in the EFT Scroll.

Data Entry of Acknowledgement Data

4.44 Acknowledgement data would travel back to the sending bank in the same route it had been received by the beneficiary bank. Data entry of the acknowledgement information would be made either at the branch level or at the Service Branch of the banks along with the fresh remittance data of the day. This acknowledgement data would form a part of EFT Data File and shall be transmitted / sent to the local NCC. Local NCC would send the acknowledgement to the NCC at the originating centre. The NCC at the originating centre would send the acknowledgement data as a part of NCC Data File to the bank which had originated the transactions. When this acknowledgement data reaches the bank, it shall in turn advise the branch electronically or with an Acknowledgement Report (Report No.EFTR-5). EFT process cycle would be treated as completed when the Remitting Branch receives this EFTR-5 report and marks off the entry in the Branch EFT Scroll.

Reconciliation of Outward Transactions with Acknowledgement Data

4.45 Participants may develop suitable software package for automatic matching and reconciliation of outgoing transactions and acknowledgement from the beneficiary banks. This exercise is an essential element of EFT system and the participants are required to put in place a reconciliation system (either automated or manual) right from the first day of participation in EFT system.

Advising the sender on payment to the Beneficiary

4.46 The sending bank is not required to advise the sender the fact of an accepted acknowledgement unless there is a specific understanding in writing between the sending bank and the sender. If there is any enquiry from the sender, the sending bank is however, duty bound to advise the position to the sender.

Refund by beneficiary bank in cases of Rejected Acknowledgement

4.47 If the beneficiary bank fails to make payment to the beneficiary for one or more of the 'Valid reasons for non-payment', the funds which the beneficiary bank had received shall have to be refunded to the sending bank. This is taken care of when the beneficiary bank reports the acknowledgement advice as 'Rejected' on the duplicate copy of EFTR-4 Report. The beneficiary bank shall take note of this acknowledgement entry at the time of inter-branch fund settlement. Beneficiary bank is not required to initiate any separate reverse EFT transaction.

Sender to be advised in case of refund

4.48 If the beneficiary specified in the sender's payment order fails to get payment though the EFT system for some valid reasons, the sender shall be informed immediately after the sending bank gets the 'Rejected Acknowledgement'. The sending bank shall also arrange to make payment to the sender by crediting the account of the sender or otherwise placing funds at the disposal of the sender.

Beneficiary bank to advise the Beneficiary of the payment

4.49 After crediting the account of the beneficiary, the beneficiary bank shall advise the beneficiary of the payments made. The Statement of account/Pass Book entry shall indicate briefly the source of funds as well.

4.50 The sender/originator shall be entitled to claim compensation in line with the extant instruction issued by DBOD on the subject of delayed credit to customer accounts for collection of outstation cheques.

Inter-Branch Funds Settlement

4.51 EFT package has a facility of generating an 'Inter-Branch Fund Settlement Report' (Report No.EFTR-6). This report would help the participants in reconciling the inter-branch accounting. Participants may develop control procedures to ensure that all entries are reconciled on a day-to-day basis. Service Branch may be made the focal point for organising this reconciliation exercise.

Holiday at the Destination Centre on EFT Business Day at the Originating Centre

4.52 If on an EFT business day at the originating centre, holiday is observed at the Destination centre, the receiving EFT centre would not be able to receive the RBI Data File on the same day. The RBI Data File for that day would be processed at the receiving EFT centre on Day-2 of the EFT cycle and the relative NCC Data Files would reach the beneficiary only in the morning of Day-3 along with the Fresh NCC Data Files. On such occasions the beneficiary banks might receive two NCC Data Files-one for the earlier day and the other on normal course. Inter-bank funds settlement for the beneficiary banks would be on Day-3.


Inter-bank Funds Settlement at Reserve Bank

5.1 Every participating bank and admitted institution shall open and maintain in every EFT centre a settlement account for settlement of payment obligations arising under the funds transfer executed under the EFT system.

5.2 Payment obligation between the participants shall be settled on by debiting or crediting the settlement accounts maintained with the EFT centre. This function of the EFT centre shall be discharged by the Deposit Accounts Department (DAD) on receipt of advices from the local NCC. Whereas the sending banks' settlement accounts would be debited on the day of transaction (Day-One) at the originating centre, the beneficiary banks' accounts would be credited on Day-Two at the destination centre.

5.3 The participants would be provided with a Settlement Report (Report No.EFTR-3) in the morning of Day-Two indicating the amount already debited on Day-One and the amount to be credited on Day-Two.

5.4 For the Rejected Acknowledgement transactions, Reserve Bank shall debit beneficiary banks (i.e. acknowledging bank at the destination centre) and credit the sending bank (bank which had initiated the EFT transaction at the originating centre).

Debit/Credit Vouchers to Deposit Accounts Department

5.5 If DAD is equipped to receive transactions over the network, the settlement data would be transmitted over the network. Till such time facility is available, NCC will be advising DAD of the settlement position with paper vouchers and reports:

After each settlement

EFT NET Settlement Report EFTR-7A

Debit Vouchers for (Dr.sending banks) EFTR-7B

Credit Voucher for crediting RBI General A/C EFTR-7D

RBI General A/c Report (Cr and Dr) EFTR-7E

Deposit Accounts Department's Daily Statement of Accounts

5.6 'EFT Clearing' shall be the narration in the daily statement of accounts supplied by DAD.

Consolidated Daily EFT Settlement report

5.7 NCC will generate a consolidated Daily EFT Settlement Report (EFTR-9) for record at its end.

Transfer Responding Advice

5.8 Since credit to RBI General A/c at one centre and the responding entries at the centre referred to in the entry would take place in quick succession on the basis of the data received electronically, movement of paper advice from the originating centre to the destination centre is not required. However, after posting the credit entry, DAD originating centre shall send an advice as per format at EFTR-7E. The duplicate copy of the advice shall be filed at the originating DAD. Similarly, DAD at the destination centre would send an advice as per format at EFTR-8E to the DAD at the originating centre indicating having already responded to the entry. DAD at the originating centre would match this advice with the EFTR-7E advice sent to the DAD at the destination centre earlier. This matching exercise should be on a day-to-day basis.



Level of computerisation Required

6.1 As per the procedure explained in Section-5, installation of computer hardware at all branches of the participants is not required. The System envisages the need for computer and communication infrastructure only at the Service Branch which would act as sending EFT service branch for outgoing EFT transactions as well as receiving EFT service branch for incoming transactions. In the initial phase, centralised data entry is recommended to have better control over EFT operations.

Computer Hardware

6.2 Hardware details are as given below :







PENTIUM 200 MHz speed with 256 KB Cache






PCI ARCHITECTURE, minimum of 3 PCI plus minimum of 3 EISA slots and 1 PCI/EISA slot



SUPER VGA 14'MONO (for console)









5.25' 1.2MB Floppy Drive



600 B - 8/10 X. SCSI



2/4 GB 4 MM DAT



104 KEYS












SCO OPEN SERVER ENTERPRISE SYSTEM Rel.5 or latest (with 5 User license & C-ISAM) OR Windows 98/NT/2000






Minimum 2400 bps


Telephone line

One direct telephone line



6.3 Operating System should be SCO-Unix Release 5.0 or above, RBINET software and the EFT package would be supplied by Reserve Bank free of charges. The responsibility of maintaining these two packages (EFT and RBINET), however, rests with the banks. Reserve Bank's support would be only for installation and training at the initial stage. The Windows version of the software is also developed by RBI and is available free of cost.

6.4 Branch level EFT software package may be developed by participants themselves if they plan decentralised data entry for outward transactions. They may also develop ;software package for generating inward credit reports in a decentralised mode. In such cases, banks are required to develop adequate control procedure to ensure authenticity and integrity of data files.

6.5 Participants are also required to install requisite anti-virus packages(s). A confirmation in this regard may be submitted by the service branches of the participants to the local NCC.


6.6 For transfer of remittance data between participating banks and local NCC, RBInet would be the main network. Participating banks can have dial up connectivity to this network to either upload their EFT Data File or download their NCC Data File. Access to this network is password protected. Participating banks would be required to change their remote password frequently so that unauthorised persons cannot get access to the network.

6.7 All EFT related data meant for local NCC may be transmitted to designated client id in RBInet. The client id name would be advised by local NCC. (bomeft' for transmission to NCC, Bombay and `maseft' for transmission to NCC, Madras) and user id : eft.

6.8 All acknowledgements provided by the network should be printed and also saved as data file.

6.9 Participating banks using RBInet for their data transmission to NCC shall not change over to floppy submission without specific approval from local NCC.

6.10 RBInet users shall be guided by the norms prescribed by Reserve Bank. Software manual of RBInet package may be collected from local NCC.

Banks with NICNET connectivity

6.11 Participants with NICNET nodes at their service branches may transmit through NICNET with prior arrangements with Local NCC.

Reserve Bank to designate any other network

6.12 Reserve Bank may designate any other network for Remitting Service Branches to transmit EFT Data Files to Remitting NCC or Destination NCC to transmit NCC. Data Files to Destination Service Branches. Presently INFINET is the designated network for EFT and ECS file transfers.

Banks with no connectivity to Computer Network

6.13 Participating banks not equipped to make use of the identified network may be permitted for a temporary period to submit to local NCC or receive from local NCC data files on floppy diskette.


Password Protection

7.1 EFT software package supplied to the EFT service branches is password protected. Users are advised to change their passwords on a regular basis.

7.2 There are two levels of users - 'super' users and 'operation' users. The operator users can change their passwords without the knowledge of super user.

Levels of User Authority

7.3 The 'operation' user is allowed data entry and data correction. Unless the data file is processed by 'super' user, data file of required layout cannot be generated.


7.4 EFT Data File to be submitted to local NCC must be encrypted with the encryption key exchanged with local NCC. When the EFT Data File reaches NCC, it is decrypted with the same key. This key is required to be kept confidential.

Declaration-cum-control statement

7.5 Participating banks are required to submit a declaration-cum-control statement (Form EFTR-3A/EFTR-3B) irrespective of whether the data file is sent over the network or on floppy diskette. This is submitted by an authorised person of the participating bank. Number and value of transactions indicated on the statement is compared with the figures generated by the system from the data file transmitted/submitted.

Checksum Total

7.6 All transactions records in the EFT Data File bear a checksum total. When the file reaches local NCC, Software package at NCC checks the integrity of the data record by regenerating a checksum total and comparing with the checksum total supplied in the file. If some data elements are altered during the transmission or tampered on the floppy diskette, the checksum total would not mach. In such case, EFT Data File would not be processed and the remitting bank would be advised suitably.

Control Reports from Local NCC to the Service Branches

7.7 Service Branches of banks act as the nodal point for all outgoing and incoming transactions. As indicated in Section-4 and Section-5, local NCC would be supplying the following three reports on a daily basis. Service branches shall scrutinise these reports and reconcile the entries on a daily basis.

Report No.EFTR-1B NCC Listing of Outgoing Transactions

Report No.EFTR-2B NCC Listing of Incoming Transactions

Report No.EFTR-3B NCC Daily Settlement Statement

Check Signal

7.8 Participating banks may mutually agree to include a check signal against every transaction and enter the check signal on the 'remarks' column on the data entry screen. The check signal algorithm may take into account a variety of data items to be decided between the banks. Accuracy of the check signal data item would be checked at the remitting branch level and at the destination branch.

Use of Pre-printed Continuous Stationery

7.9 All reports relating to EFT transactions generated either at Reserve Bank or at EFT service branch level shall be on pre-printed continuous stationery which will bear the name of the organisation and a serial number.

Use of Printer No. on EFTR-5A and EFTR-5B

7.10 Since the branches would make payments to the beneficiaries on the strength of the hardcopy credit report (Report No.EFTR-5A) or refund the remitter of the remittance amount for the rejected acknowledgement on the basis of Acknowledgement report (EFTR-5B), EFT package has been designed to generate a 'copy number' against every transaction. Branches shall act only when copy number is '1'. Copies printed after the first copy would bear copy number 2,3,4.…. onwards. If, for any reason Service Branches has to send copy no.2 instead of copy no.1, the copy must contain a duly signed certificate that 'copy no.1 has not been sent' or 'copy no.2 may be treated as copy no.1' etc.

Contingency Steps

7.11 In case RBInet communication links fail at a centre, movement of data files between EFT service branch and NCC may take place by physical delivery of floppy diskettes.

7.12 In case inter-city links for RBInet fails, NCCs would exchange RBI Data Files through NICNET. If both RBInet and NICINET fail, NCCs would arrange to send through some other network or the Data Files would be sent on floppy diskette or any other magnetic media between the centres through alternate arrangements.

7.13 In case as EFT service branch is not in a position to operate due to fire or some such disaster, another branch at the same centre can be designated as service branch for a temporary period. A backup copy of EFT software package and RBInet package should therefore be stored in another branch under secure conditions to meet such eventuality.

Written confirmation form service branches on contingency arrangements

7.14 NCC may obtain a written confirmation from the local EFT service branches of the contingency arrangements made by each of them.

EFT Transactions subject to periodic Internal Audit

7.15 EFT transactions should be subject to periodic internal audit by the participants. A checklist of items to be scrutinised by the internal auditors/inspectors is given at Appendix-1. The checklist is only illustrative and the participants may update the same in light of their internal systems and procedures.


General rights and obligations of participating banks or institutions

8.1 Every participating bank or institution admitted in the EFT System shall, subject to compliance with the procedural guidelines, be entitled to execute any payment order for Funds Transfer to a beneficiary of the payment order, issued or accepted by it.

8.2 Every participating bank or institution shall maintain the security, integrity and efficiency of the System.

Obligations of sending bank

8.3 The sending bank shall not execute a payment order without complying with the security procedure. No payment order shall be accepted for execution in the EFT System if the beneficiary's bank is not a participating bank or institution.

8.4 The sending bank shall be responsible for the accuracy of the name of the beneficiary, the nature and style of the account and account number of the beneficiary, the name of the beneficiary's bank and the authenticity of every payment order executed by it.

8.5 The sending bank shall bear the liability for loss if any caused to any participant in the EFT System on account of the acceptance by it of any revocation of a payment order after it has executed it.

8.6 The sending bank shall not be entitled to bind any other participants in the EFT System with any 'special circumstances' attached to a payment order accepted by it.

8.7 The sending bank shall maintain duly authenticated record of all payment orders executed by it for a period for which bank records are required to be preserved under the applicable rules.

8.8 The sending bank shall, upon completion of funds transfer of a payment order, furnish to the originator on request by him, a duly authenticated record of the transaction.

Obligations of the sending EFT Service Branch

8.9 The sending EFT Service Branch shall be responsible for the accuracy of the contents of EFT data title and the authenticity of the payment orders contained therein as received by the EFT Centre in compliance with the security procedures.

8.10 The sending EFT Service Branch shall be responsible for settlement of all payment obligations in regard to payment orders executed by it.

8.11 The sending EFT Service Branch shall be responsible for ensuring execution of the EFT data file complying with security procedures and time schedule.

8.12 The sending EFT Service Branch shall ensure, before execution of any EFT Data File that the balance in its settlement account are adequate to cover its settlement obligation and ensure that the ceiling, if any, specified for it is not exceeded and the requirement of collateral if specified by the Nodal Department is adequate for execution of the EFT data file executed by it.

8.13 The sending EFT Service Branch shall generate, dispatch and maintain records of transaction in accordance with procedure specified.

Obligations of the sending EFT Centre

8.14 The sending EFT Centre shall be responsible for receiving the EFT data files from the EFT Service Branches in compliance with the security procedure.

8.15 The sending EFT Centre shall be responsible for processing and sorting the payment orders and preparing the RBI Data File EFT centre-wise in accordance with the procedure specified.

8.16 The sending EFT Centre shall execute the payment orders received before the cut-off time in an EFT working day. EFT data files if any, received after the out-off time, or payment orders for which the sending service branch has not made adequate provision for settlement may be treated as received on the opening of the next EFT working day and dealt with accordingly.

8.17 Sending EFT Centre shall generate and dispatch and maintain in accordance with the procedure specified, records and reports of the transactions processed and executed by it.

Obligations of receiving EFT Centre

8.18 Receiving EFT Centre shall be responsible for receiving and processing the RBI Data Files complying with the security procedure and time schedule specified for the purpose.

8.19 Receiving EFT Centre shall in compliance with time schedule and security procedure, process and sort out the RBI Data File bank-wise and after crediting the settlement accounts with the corresponding value, transmit the NCC Data Files to the respective receiving EFT Service Branches.

8.20 Receiving EFT Centre shall generate, dispatch and maintain records of transactions, in accordance with the procedure specified.

Obligations of the Receiving EFT Service Branch

8.21 Receiving EFT Service Branch shall be responsible for receiving NCC Data File from the receiving EFT Centre in compliance with the security procedure.

8.22 Receiving EFT Service Branch shall process the NCC Data File in compliance with the security procedure and sort-out the payment orders branch wise and transmit to the respective branches the payment orders for execution in accordance with the time schedule and in compliance with the security procedure.

8.23 Receiving EFT Service Branch shall generate, dispatch and maintain records of transaction accordance with the procedure specified.

Rights and obligation of beneficiary bank

8.24 The beneficiary bank shall execute the payment order on the EFT working day on which the payment order is received by it unless it notices one or more of the following deficiencies.

a) The beneficiary specified in the payment order has no account or the account of the beneficiary maintained by the beneficiary's bank does not tally with the account specified in the payment order

b) The beneficiary bank is prevented by instructions of the beneficiary not to give or receive any credit to the account.

c) The account designated in the payment order is closed.

8.25 The beneficiary bank may reject a payment order on one or more of the grounds mentioned in Clause (1) above. The beneficiary bank shall notify, in the manner specified, the sending bank of the rejection of the payment order along with the reasons thereof.

Branches/Offices of the participants or EFT centre

8.26 For the purpose of determination of the rights and liabilities arising out of a funds transfer under this system, each branch or office of a participating bank or as the case may be an institution and each EFT centre shall be treated as a separate unit.


Limitation of liability for loss

9.1 Parties in the EFT System shall be liable for any loss arising on account of any reason other than for system failure, power failure or any other reason beyond the control of the participant.

Originator not entitled to claim against any party other than the sending bank

9.2 These Guidelines shall not be construed as entitling the originator of the payment order executed in the EFT System, to make a claim against any party other than the sending bank in the EFT System.

Determination of liability

9.3 Liabilities of parties in the EFT System to pay interest for the delayed period or for loss arising on account of any error shall be determined on the basis of fault.

9.4 Every EFT Centre, participating bank and participating institution shall be responsible for the delay in the completion of the Funds Transfer or loss on account of error, attributable to it. If the delay or loss is attributable to the non compliance with the Regulations or procedural guidelines specified from time to time, a party responsible for such non-compliance shall be liable for the delay or loss.

Dispute Resolution

9.5 For the purpose of resolving by arbitration any dispute between parties in the EFT System or between an originator and a party in the EFT System, the Governor may provide for dispute resolution machinery, as considered necessary.


Processing Charges by Reserve Bank

10.1 Reserve Bank shall not levy any processing charge for the services rendered by the Nodal Department or the EFT centres till March 31, 2006. The position would be reviewed by Reserve Bank after the expiry of this period.

Service Charges by banks to the sender and beneficiary

10.2 Service Charges to be levied by the participants on the sender/originator and the beneficiary may be worked out by the participants themselves.

Test and Training

10.3 All new participants would have to undergo a period of Test and Training for minimum five working days. EFT service branches would be required to send test data on a daily basis to local NCC (on the network or by physical delivery of floppy diskette) during this period. Local NCC would also apply test NCC Data File to these banks for taking out test reports.

Word PDF


Check-list for Scrutiny of EFT System for Internal Auditors/Inspectors

Reference :

(para 7.15 of the Guidelines)

While auditing the EFT function at the service branch, the internal auditors/inspectors should necessarily scrutinise the observance of the following security procedures :

1. Password - The EFT software provides two types of users depending on the access level. The operations carried out by the users are logged by the EFT package. Therefore, it is essential to protect the system from unauthorised entry. This, in turn, requires that the passwords used by them are carefully used. Both, the `super' user as well as the `operator' user should change the password on a regular basis. The operator can change the password without the knowledge of the `super' user.

(para 7.1 and 7.2)

2. User Authority - There should be demarcation of work between the `super' user and the `operator' user. For any transaction to be completed, two persons should necessarily be involved.

(para 7.3)

3. Encryption/Decryption - The data file to be submitted to the local NCC is to be encrypted giving a key and that key is to be exchanged with local NCC in confidence. It is recommended that the key should be changed at regular intervals (at least once a month).

(para 7.5)

4. Verification/Reconciliation - Irrespective of whether the data file is sent over the network or on floppy, verification of control statement should be given due emphasis. Local NCC supplies three reports

Report No.EFTR-1B NCC Listing of Outgoing Transaction

Report No.EFTR-2B NCC Listing of Incoming Transaction

Report No.EFTR-Daily Settlement Statement

to the Service branches have to reconcile the figures on a daily basis.

(para 7.5 and 7.7)

5. Pre-printed Stationary - All reports relating to EFT transactions both at the Reserve Bank and the Service Branches should be on pre-printed stationary bearing the name of the organisation and serial number.

(para 7.9)

6. After transmitting the data file over the REBINet, the `super' user should check the status of the EFT message and update the transmission status; printout of the acknowledgement status generated by RBINet software should also be taken. This status indicates the time when NCC received the EFT message.

7. Original/duplicate Reports - Branches make payment to the beneficiary based on the hard copy credit report (Report No.EFTR-5A) or refund the remitter of the remittance amount for the rejected acknowledgement on the basis of acknowledgement report (EFTR-5B). EFT package has been designed to generate copy number against every copy printed. Branches are to act on copy number '1'. Copies generated after the first copy bear the numbers 2,3,4,5…….. onwards. If for any reason Service branches are not in a position to send the first copy and that needs to be indicated in the copy sent with duly signed certification that 'copy number 1 has not been sent and that they should consider copy number---- as copy number 1 etc.'

(para 7.10)

8. Software packages supplied by the Reserve Bank should be kept in a secure palce - preferably in the custody of the officer-in-charge of the Service Branch or the designated `System Administrator' of the Service Branch.

9. Even if there are no EFT transactions to be reported, 'Hello' messages should be sent to Local NCC on a daily basis through RBINet.

10. Periodic Scrutiny may be conducted by a person other that the `super' and `operator' users that data/files are not tampered and that reconciliation is done on a daily basis.

11. Backup - Back-up exercise as indicated at Appendix-II of the Guidelines should be carried out and recorded in a register by the `super' user on a daily basis.

Note: This is not a comprehensive check list. The participating banks are required to update the same in light of the procedural guidelines they would be issued to their service branches.


Back-up Procedure for service branches of banks

1. Each participating bank should have a back-up computer system so that the back-up system is made operational within an hour of the primary system going inoperative. This back-up system should be located either at the service branch itself or any other branch/office in the city. Alternatively, banks can have mutual back-up arrangements. In such cases of mutual back-up, due care need be taken on data security.

2. Transaction files should be backed-up on a daily basis and the 'super' user for the day should record this fact in a register. Audit trail files should also be backed-up.

3. A copy of the EFT software package should be in the custody of the Officer-in-Charge or System Administrator of the Service Branch.

4. Internal Auditors/Inspectors of banks should necessarily examine this aspect while inspecting/auditing the Service branch.

For further clarification, please contact :

Electronic Funds Transfer Cell (EFT Cell),
Department of Payment and Settlement Systems,
Reserve Bank of India,
Central Office Building,
Shahid Bhagat Singh Marg, Fort,
Mumbai - 400 001.
Telephone No.(022)22661602 Ext.2302
Fax No.(022) 22659566

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