FEDAI rule: Transfer of funds between Vostro Accounts with two banks explained

With effect from April 1st, 2013, the bank carrying out inter-bank VOSTRO transfer by RTGS should follow the procedure as detailed below as per FEDAI rule no. 4.6;
i) In the “remark” column of RTGS message related to Vostro Accounts with two banks, the remitting bank should mention that “We undertake to send form A3 separately”.
ii) As per the rule, the remitting bank shall ensure that from A3 reaches the beneficiary’s bank within the time limit of 5 days. Delay beyond 5 working days would attract penalties on the remitting bank.
iii) In case, the beneficiary bank does not get form A3 within 5 working days, they must lodge a claim with the remitting bank within 15 days, from the date of transfer of funds. Remitting bank should ensure that Form A3 reaches the beneficiary bank promptly thereafter.
iv) In case, the beneficiary bank does not get form A3 within 5 working days, a remitting bank would be required to pay the beneficiary bank penalty at the rate of Rs. 1000/- per day for the period in excess of 5 days from the date of transfer of funds, till the form A3 reaches the beneficiary bank.
v) If the beneficiary bank lodges the claim after 15 days from the date of transfer of funds, the claim amount will be capped at Rs.10000/- (Rupees ten thousand only).
vi) In case of any dispute between the remitting bank and beneficiary bank, the matter may be referred to as FEDAI. In turn FEDAI will appoint a sub-committee of 3 members from the Managing Committee and give directions to the parties concerned.

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FEDAI rule: Transfer of funds between Vostro Accounts with two banks explained

Author: Surendra Naik

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