FAQ's
National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). The set of procedures to be followed by various stakeholders participating in the system is available on the RBI website under the following link: https://rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2346
NEFT offers the following advantages for funds transfer or receipt:
- Round the clock availability on all days of the year.
- Near-real-time funds transfer to the beneficiary account and settlement in a secure manner.
- Pan-India coverage through large network of branches of all types of banks.
- The beneficiary need not visit a bank branch for depositing the paper instruments. Remitter can initiate the remittances from his / her home / place of work using internet banking, if his / her bank offers such service.
- Positive confirmation to the remitter by SMS / e-mail on credit to beneficiary account.
- Penal interest provision for delay in credit or return of transactions.
- No levy of charges by RBI from banks.
- No charges to savings bank account customers for online NEFT transactions.
- The transaction charges have been capped by RBI.
- Besides funds transfer, NEFT system can be used for a variety of transactions including payment of credit card dues to the card issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.
- The transaction has legal backing.
- Available for one-way funds transfers from India to Nepal.
Ans: Following is the step-wise flow of NEFT transaction.
Step-1: An individual / firm / corporate willing to transfer funds through NEFT can use the internet / mobile banking facility offered by his / her bank for initiating online funds transfer request. The remitter has to provide details of beneficiary such as, name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc. for addition of the beneficiary to his / her internet / mobile banking module. Upon successful beneficiary addition, the remitter can initiate online NEFT funds transfer by authorising debit to his / her account. Alternatively, the remitter can also visit his / her bank branch for initiating NEFT funds transfer through branch / off-line mode. The customer has to fill-in the beneficiary details in NEFT application form available at the bank branch and authorise the branch to debit to his / her account to the extent of the amount requested in NEFT application form.
Step-2: The originating bank prepares a message and sends the message to its pooling centre, also called the NEFT Service Centre.
Step-3: The pooling centre forwards the message to the NEFT Clearing Centre, operated by the RBI, to be included for the next available batch.
Step-4: The Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit). Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling centre (NEFT Service Centre).
Step-5: The beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.
Indian Financial System Code (IFSC) is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. It is a 11-digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.
Bank-wise list of IFSCs is available with all the bank-branches participating in NEFT scheme. List of bank-wise branches participating in NEFT and their IFSCs is also available on the website of RBI at https://rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2009. All member banks have also been advised to print the IFSC of the branch on cheques issued to their customers.
Individuals, firms and corporates maintaining accounts with any member bank, participating in the NEFT system, can electronically transfer funds to any individual, firm or corporate having an account with any other bank in the country participating in the NEFT system.
The list of bank-wise branches participating in NEFT is available on the website of RBI at https://rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2009.
No, there is no limit imposed by the RBI for funds transfer through NEFT system. However, a member bank may place amount limits based on its own risk perception with the approval of its Board.
Yes, a person who does not have a bank account can remit funds through NEFT to a beneficiary having a bank account, with another NEFT member bank. It can be done by depositing cash at the nearest NEFT enabled branch of any bank, by furnishing additional details such as complete address, telephone number, etc. Such cash remittances will, however, be restricted to a maximum of ₹50,000 per transaction.
The outbound remittances through NEFT system are permitted only to Nepal under Indo-Nepal Remittance Facility (INRF) Scheme. Under this Scheme, the remitter can transfer funds from any of the NEFT-enabled bank branches in India to Nepal, irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not. The beneficiary would receive funds in Nepalese Rupees. The details of the INRF Scheme are available on the website of RBI at https://rbi.org.in/scripts/FAQView.aspx?Id=67.
The NEFT system is available round the clock throughout the year on all days, i.e., on 24x7x365 basis. NEFT presently operates in batches on half-hourly intervals throughout the day. In case of non-availability of NEFT for any reason, appropriate message will be broadcasted by RBI to all system participants.
Yes, NEFT can be used to transfer funds from / to NRE and NRO accounts in the country. This, however, is subject to the adherence of the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.
No. NEFT is a credit-push system i.e., transactions can be originated by the payer / remitter / sender only to pay / transfer / remit funds to beneficiary.
The remitter and the beneficiary can track status of NEFT transaction by contacting NEFT Customer Facilitation Centre (CFC) of their bank, respectively. Details of NEFT CFCs of banks are available on the websites of the respective banks. The details of CFC of member banks are also available on the website of RBI at https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2070.
For the purpose of faster tracking of transaction, you may need to provide few details related to transaction such as Unique Transaction Reference (UTR) number / transaction reference number, date of transaction, sender IFSC, amount, beneficiary name, beneficiary IFSC, etc., to your bank.
After crediting the account of the beneficiary, the beneficiary bank shall advise the beneficiary of the funds received. The remitter’s name shall be printed in the Account Statement / Pass Book of the beneficiary.
There is an optional field with tag 7495 in NEFT payment message that enables inclusion of additional sender-to-receiver information. Destination banks should capture and store this information in their CBS / other systems as appropriate, to be provided to the customer on request.
If the beneficiary specified in the sender's payment instruction fails to get payment through the NEFT system for some valid reasons, the originating bank shall provide the description “NEFT-Return” in the pass book / account statement of the originator whose NEFT transaction is returned.
The NEFT Help Desk / Contact point of the RBI can be approached at nefthelpdeskncc@rbi.org.in.
A timeline of two hours from the batch settlement can be expected, within which beneficiary’s account should be credited.
If it is not possible to afford credit to the account of the beneficiary for any reason, destination banks are required to return the transaction (to the originating branch) within two hours of completion of the batch in which the transaction was processed.
If the NEFT transaction is not credited or returned within two hours after batch settlement, then the bank is liable to pay penal interest to the affected customer at the current RBI LAF Repo Rate plus two percent for the period of delay / till the date of credit or refund, as the case may be, is afforded to the customers’ account without waiting for a specific claim to be lodged by the customer in this regard.
The credit is given to the account number written / given by remitter in his / her application / instruction. Credit to beneficiary account is released solely based on account number. It is the responsibility of remitting customer to write correct account number. The originator / sender should exercise due care in providing the correct account number of the beneficiary, in the NEFT remittance instruction / application.
You may approach grievance redressal cell of your bank with details of the disputed transaction. In case your grievance is not resolved within 30 days, you may make a complaint under “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS 2021)”. The RB-IOS 2021 provides a single reference point for customers to file complaints against the RBI regulated entities specified therein. The RB-IOS, 2021 is available at the following path on the RBI website: https://rbidocs.rbi.org.in/rdocs/content/pdfs/RBIOS2021_121121.pdf.
The acronym 'RTGS' stands for Real Time Gross Settlement, which can be explained as a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction-by-transaction basis (without netting). 'Real Time' means the processing of instructions at the time they are received; 'Gross Settlement' means that the settlement of funds transfer instructions occurs individually.
Considering that the funds settlement takes place in the books of the Reserve Bank of India (RBI), the payments are final and irrevocable.
RTGS offers many advantages for funds transfer:
- It is a safe and secure system for funds transfer.
- RTGS transactions / transfers have no amount cap set by RBI.
- The system is available on all days on 24x7x365 basis. There is real time transfer of funds to the beneficiary account.
- The remitter need not use a physical cheque or a demand draft.
- The beneficiary need not visit a bank branch for depositing the paper instruments.
- The beneficiary need not be apprehensive about loss / theft of physical instruments or the likelihood of fraudulent encashment there of.
- Remitter can initiate the remittances from his / her home / place of work using internet banking, if his / her bank offers such service.
- The transaction charges have been capped by RBI.
- The transaction has legal backing.
NEFT is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches. Contrary to this, in RTGS, the transactions are processed continuously on a transaction-by-transaction basis throughout the day.
RTGS is available 24x7x365 with effect from December 14, 2020.
The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper or maximum ceiling.
With effect from July 01, 2019, RBI has waived the processing charges levied by it for RTGS transactions. Banks may pass on the benefit to its customers.
With a view to rationalise the service charges levied by banks for offering funds transfer through RTGS system, a broad framework of charges has been mandated as under:
a) Inward transactions – Free, no charge to be levied.
b) Outward transactions – ₹ 2,00,000/- to 5,00,000/-: not exceeding ₹ 25/- (exclusive of tax, if any)
Above ₹ 5,00,000/-: not exceeding ₹ 50 (exclusive of tax, if any)
Banks may decide to charge a lower rate but cannot charge more than the rates prescribed by RBI.
The remitting customer has to furnish the following information to a bank for initiating an RTGS remittance:
i. Amount to be remitted
ii. The account number to be debited
iii. Name of the beneficiary bank and branch
iv. The IFSC number of the receiving branch
v. Name of the beneficiary customer
vi. Account number of the beneficiary customer
vii. Sender to receiver information, if any
viii. Sender and Beneficiary Legal Entity Identifier (for eligible transactions)
The IFSC number can be obtained by the remitter (customer) from his / her bank branch. Alternatively, it is available on the cheque leaf of the beneficiary. This code number / bank branch information can be communicated by the beneficiary to the remitting customer. The list of IFSCs is also available on the RBI website at the link
https://rbi.org.in/Scripts/Bs_viewRTGS.aspx?Category=5. The list is updated on a fortnightly basis.
For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch need to be RTGS enabled. Presently, there are more than 1,60,000 RTGS enabled bank branches, the list of which is available on the RBI website at the link https://rbi.org.in/Scripts/Bs_viewRTGS.aspx?Category=5. The list is updated on a fortnightly basis.
The following should be ensured while putting through a funds transfer transaction using RTGS –
- Originating and destination bank branches are part of the RTGS network.
- Beneficiary details such as beneficiary name, account number and account type, name and IFSC of the beneficiary bank branch should be available with the remitter.
- Extreme care should be exercised in providing the account number of the beneficiary, as, during processing RTGS transactions, the credit will be given to the customer’s account solely based on the account number provided in the RTGS remittance instruction / message.
Transactions in RTGS happen in real time and it is not possible to match name and account number before affording credit to the beneficiary. Since name in the Indian context is spelt differently and would not really match with that available with the beneficiary bank, the process of affording credit solely based on the account number of the beneficiary has been enabled.
Our Circular Ref. No. DPSS (CO) EPPD No. / 863 / 04.03.01 / 2010-11 dated October 14, 2010 on ‘Electronic payment products – Processing inward transactions based solely on account number information’ (available at https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6043&Mode=0) may be referred to for further details.
Under normal circumstances, the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank must credit the beneficiary's account within 30 minutes of receiving the funds transfer message.
No, the RTGS system does not accept future value dated transactions.
No. RTGS is a credit-push system i.e., transactions can be originated by the payer / remitter / sender only to pay / transfer / remit funds to a beneficiary.
While the customers do not have the facility to track the transaction, the RBI has implemented the feature of positive confirmation in an RTGS transaction. Under this, the remitting bank would receive a message from RBI (through the beneficiary bank) that the money has been credited to the beneficiary bank / customer account. Based on this, the remitting bank should advise the remitting customer that money has been credited to the receiving bank’s beneficiary account.
Yes, if it is not possible to credit the funds to the beneficiary customer’s account for any reason, the funds received by the RTGS member bank will be returned to the originating bank within one hour of receipt of the payment at the Payment Interface (PI) or before the end of the RTGS Business Day, whichever is earlier. Once the money is received back by the remitting bank, the original debit entry in the customer's account needs to be reversed.
In case of any delay in returning the failed payment, the originating customer is eligible to receive compensation at current repo rate plus 2%.
The customer can contact his / her bank / branch if there is an issue of delay / non-credit to the beneficiary account. The details of Customer Facilitation Centre of member banks are also available on the website of RBI at https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2070.
Unique Transaction Reference (UTR) number is a 22-character code used to uniquely identify a transaction in RTGS system.
You may approach RTGS Help Desk / Contact point of the RBI at rtgsmumbai@rbi.org.in.
You may approach grievance redressal cell of your bank with details of the disputed transaction. In case your grievance is not resolved within 30 days, you may make a complaint under “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS 2021)”. The RB-IOS 2021 provides a single reference point for customers to file complaints against the RBI regulated entities specified therein. The RB-IOS, 2021 is available at the following path on the RBI website: https://rbidocs.rbi.org.in/rdocs/content/pdfs/RBIOS2021_121121.pdf.
Complaints can be filed online on https://cms.rbi.org.in, or through the dedicated e-mail or sent in physical mode to the ‘Centralised Receipt and Processing Centre’ set up at RBI, 4th Floor, Sector 17, Chandigarh – 160 017 in the format given at the following path - https://rbidocs.rbi.org.in/rdocs/content/pdfs/RBIOS2021_121121_A.pdf. A toll-free number – 14448 (9:30 am to 5:15 pm) – is also available for customers to seek assistance in filing complaints and information on grievance redressal, with multi-lingual support.
The FAQs on “Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems” on the RBI website at https://www.rbi.org.in/Scripts/FAQView.aspx?Id=140 can be referred to.
These FAQs are issued by the Reserve Bank of India for information and general guidance purposes only. The Bank will not be held responsible for actions taken and/or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars and notifications issued from time to time by the Bank.
RBI issued circular RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 dated April 28, 2001 on ‘Educational Loan Scheme’ advising all Scheduled Commercial Banks to adopt the Model Education Loan Scheme, formulated by Indian Banks’ Association (IBA). The Scheme has been revised by IBA from time to time and its latest revision is Model Education Loan Scheme (MELS), 2021.
For detailed information on guidelines to banks on education loan, please refer to MELS, 2021 and its related circulars. Copy of the aforesaid Scheme is available on the IBA website.
It is to be noted that the MELS, 2021 provides broad guidelines to the banks for operationalizing the educational loan scheme and implementing banks will have the discretion to make changes as deemed fit.
No. Model Education Loan Scheme, 2021 is currently applicable to Scheduled Commercial Banks (SCBs) only. The list of SCBs is available here.
RBI issued circular RPCD.SME&NFS.BC.No.69/06.12.05/2009-10 dated April 12, 2010, on Collateral Free Loans - Educational Loan Scheme, making it mandatory that banks must not obtain collateral security in the case of education loans upto ₹4 lakh.
Reserve Bank of India has deregulated interest rates on advances including education loans sanctioned by Scheduled Commercial Banks. The interest rates are determined by banks with the approval of their respective Board of Directors, subject to regulatory guidelines on interest rate on advances contained in RBI’s Master Direction- Reserve Bank of India (Interest Rate on Advances) Directions, 2016 as updated from time to time.
In terms of RBI circular RPCD. MSME&NFS.BC.No.46/06.12.05/2012-13 dated November 09, 2012, banks have been advised not to reject any education loan application for reasons that the residence of the borrower does not fall under the bank's service area.
In case of any specific complaint against any bank relating to deficiency in service pertaining to education loan, the same can be filed with the bank concerned. If there is no response to the complaint within one month or non-satisfactory response from the bank, the complaint may be filed under ‘The Reserve Bank - Integrated Ombudsman Scheme, 2021’. Complaints can be filed online through Complaint Management System (CMS) portal of the RBI, at https://cms.rbi.org.in. Complaints can also be filed through the dedicated e-mail or sent in physical mode to the ‘Centralised Receipt and Processing Centre’ set up at Reserve Bank of India, 4th Floor, Sector 17, Chandigarh – 160017, as per the Format provided in the Scheme.
Disclaimer: These FAQs are issued by the Reserve Bank of India for information and general guidance purposes only. The Bank will not be held responsible for actions taken and/or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars and notifications issued from time to time.
Local Cheques
Local cheques are payable within the jurisdiction of the clearing house and will be presented through the clearing system prevailing at the centre. Credit arising out of local cheques shall be given to the customer’s account as indicated in the Cheque Collection Policy (CCP) of the concerned collecting bank.
Notwithstanding to the CCP of concerned collecting bank, ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customers’ accounts immediately after closure of the relative return clearing on the next working day or maximum within an hour of commencement of business on the third working day from the day of presentation in clearing, subject to usual safeguards.
Under grid-based Cheque Truncation System (CTS) clearing, all cheques drawn on bank branches falling within in the grid jurisdiction are treated and cleared as local cheques. The grid clearing allows banks to present / receive cheques to/ from multiple cities to a single clearing house through their service branches in the grid location.
If there is any delay in credit, beyond the period specified above, customer is entitled to receive compensation at the rate specified in the CCP of the concerned collecting bank. In case, no rate is specified in the CCP for delay in realisation of local cheques, compensation at savings bank interest rate has to be paid for the corresponding period of delay.
Outstation Cheques
Maximum timeframe for collection of cheques drawn on state capitals / major cities / other locations are 7/10/14 days respectively.
If there is any delay in collection beyond this period, customer is entitled to receive compensation at the rate specified in the CCP of the concerned bank. In case the rate is not specified in the CCP, interest rate on Fixed Deposits for the corresponding maturity to be paid. Banks' cheque collection policy also indicates the limit up to which outstation cheques are given immediate / instant credit.
If cheques are lost in transit or in the clearing process or at the paying bank's branch under physical instrument delivery clearing, the bank should immediately bring the same to the notice of the presenting customer (beneficiary)’s notice so that the customer can inform the drawer to record stop payment and can also take care that other cheques issued anticipating the credit arising out of the lost cheque are not dishonoured due to non-credit of the amount of the lost cheques / instruments.
It may however be noted that the probability of losing the physical instrument in the hands of paying bank is remote in the locations covered by CTS as clearing is undertaken on the basis of images. If the instrument is lost after lodging with the collecting bank but before truncating the same for sending through image-based clearing, the presenting bank should follow the procedure indicated above.
The customer is entitled to be reimbursed by banks for related expenses for obtaining duplicate instruments and interest for reasonable delays in obtaining the same.
Local cheque collection charges are decided by the concerned bank from time to time and communicated to customer through their CCP as part of the Code of Bank’s Commitment to Customers.
Banks cannot charge more than the following for outstation cheques:
Up to and including Rs.5,000 – Rs.25 per instrument + service tax; Above Rs.5,000 and up to and including Rs.10,000 – not exceeding Rs.50 per instrument + service tax; Above Rs.10,000 and up to and including Rs.1,00,000 – not exceeding Rs.100 per instrument + service tax; Above Rs.1,00,000 – left to the banks to decide. No additional charges such as courier charges, out of pocket expenses, etc., should be levied.
It may be noted, no outstation cheque collection charges to be levied if the collecting bank and the paying bank are located within the jurisdiction of the same CTS grid even though they are located in different cities.
No bank can refuse to accept outstation cheques deposited for collection or refuse to offer its products to customers.
Like in most countries, banks in India also are required to develop their own individual policy / procedures relating to collection of cheques. The customer is entitled to receive due disclosures from the bank on the bank's obligations and the customers' rights.
Broadly, the policies formulated by banks should cover the following areas:
Immediate credit for local / outstation cheques, Time frame for collection of local / outstation instruments and compensation payable for delayed collection.
The CCPs of various banks are made available on the website of respective bank.
Banks are obliged to disclose their liability to customers by way of compensation / interest payments due to delays for non-compliance with the standards set by the banks themselves. The customer has to be compensated by way of compensation/interest payment even if no formal claim is lodged to the effect.
Customer has the right to know the CCP of the bank before entering into any transaction.
The bank is obliged to disclose the amount up to which immediate credit of outstation cheque is offered in its Comprehensive Notice Board, which is to be displayed at each and every branch of the bank. The bank is also required to disclose time frame for collection of local / outstation instruments and policy for compensation payable for delayed collection. The same will be available in the Information Booklets which should be available at all the bank branches. The customer is also entitled to receive a copy of the bank’s CCP, if (s)he so desires. Banks are also required to put up their CCP on their websites.
Reserve Bank of India (RBI) has authorised various types of payment systems to enable transfer of funds. You may refer to the following link on RBI website to get overview of various payment systems available in India:
Banks are required to provide both the cheque drop box facility and the acknowledgement facility at their collection counters. No bank branch can refuse to give an acknowledgement to the customer if the latter asks for the same while tendering cheque for collection at the bank branch’s counter.
If any customer has a complaint against a bank due to non-payment or inordinate delay in the payment or collection of cheques, complaint can be lodged with the bank concerned. If the bank fails to respond within 30 days, you may make a complaint under “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS 2021)”. Complaints can be filed online on https://cms.rbi.org.in,
Under the facility of cash withdrawal at PoS terminals, cardholders can withdraw cash using their debit cards and full KYC prepaid cards issued by banks and non-banks in India. However, credit cards cannot be used under this facility. Cash can also be withdrawn at PoS terminals through Unified Payments Interface (UPI) as well as through use of electronic cards that are linked with overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
Yes. Under this facility, a cardholder can withdraw cash up to ₹2,000 per transaction within an overall monthly limit of ₹10,000.
Charges, if any, levied on cash withdrawals shall not exceed 1% of the transaction amount.
No. The facility is made available at merchant establishments designated by the acquirer banks (i.e. the banks that deploy the PoS terminals) after a process of due diligence. The designated merchant establishments have to clearly indicate / display the availability of this facility along with the charges, if any, payable by the customer.
Yes. Under this facility, cash can be withdrawn from PoS terminal(s) at designated merchant establishment(s), irrespective of the fact whether the card issuer and the acquiring bank are same or not.
No. The facility is available irrespective of whether the card holder makes a purchase or not.
Yes. The merchant is required to provide a printed receipt generated by the PoS terminal. In case the facility is availed along with the purchase of merchandise, the receipt generated shall separately indicate the amount of cash withdrawn.
The cardholder can lodge grievance(s) with his / her card issuer. In case the card issuer does not respond within the stipulated time, or the reply so received is not satisfactory, the cardholder shall have recourse to the Reserve Bank - Integrated Ombudsman Scheme, 2021 (as amended from time to time) for redressal.
No. The acquirer banks (other than local area banks) may, based on the approval of their Board, provide cash withdrawal facility at PoS terminals. The local area banks shall require the approval of RBI for providing this facility.
More information about this facility can be found in the following circulars issued by the RBI:
DPSS.CO.PD.No.147/02.14.003/2009-10 dated July 22, 2009,
DPSS.CO.PD.No.563/02.14.003/2013-14 dated September 5, 2013
DPSS.CO.PD.No.449/02.14.003/2015-16 dated August 27, 2015
DPSS.CO.PD.No.501/02.14.003/2019-20 dated August 29, 2019,
DPSS.CO.PD.No.1465/02.14.003/2019-20 dated January 31, 2020,
DPSS.CO.PD.No.S-99/02.14.006/2021-22 dated May 19, 2021.
These FAQs are issued by the Reserve Bank of India (hereinafter referred to as “Bank”) for information and general guidance purposes only. The Bank will not be held responsible for actions taken and / or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars, guidelines and notifications issued from time to time by the Bank.
Cards can be classified on the basis of their issuance, usage and payment by the card holder. There are three types of cards (a) debit, (b) credit, and (c) prepaid.
Debit cards are issued by banks and are linked to a bank account. Credit cards are issued by scheduled commercial banks (excluding Payments banks), Regional Rural Banks (in collaboration with other banks), and Urban Cooperative Banks, Non-Bank Financial Companies (subject to approval from RBI). Prepaid cards are issued by eligible banks and authorised non-banks.
The debit cards can be used to withdraw cash from an ATM, purchase of goods and services at points of sale (PoS) terminals or e-commerce (online purchase). They can be used domestically, or internationally.
The credit cards can be used for purchase of goods and services at PoS terminals / e-commerce. These cards can be used domestically and internationally (provided they are enabled for such use). Credit cards can also be used to draw cash advances from ATMs, subject to prescribed terms, and conditions.
By nature, prepaid cards can be (a) Small PPIs and (b) Full-KYC PPIs. The usage depends on the type of PPI and is subject to prescribed limits and conditions. These cards can be issued by both banks and non-banks.
- Small PPIs can be used only for purchase of goods and services at a group of clearly identified merchant locations / establishments, which have a specific contract with the issuer (or contract through a payment aggregator / payment gateway) to accept the PPIs as payment instruments.
- Full KYC-PPIs can be used for purchase of goods and services, funds transfer or cash withdrawal.
FAQs on Prepaid Payment Instruments (PPIs) give further detailed information on PPIs.
A card can be dipped (Chip based card), tapped (Contactless Near Field Communication {NFC} Card) or swiped (Magnetic-Stripe card) at a PoS terminal.
The EMV Chip & PIN card stores card data in a chip, while the data in magnetic stripe card is stored on the magnetic stripe present on the card. In a Contactless NFC card, the card is read by keeping the card near the card reader. The EMV Chip & PIN cards and Contactless NFC cards are considered to be safer when compared to Magnetic Stripe cards.
A CP transaction is a transaction that is carried out through physical presence of card at the point of transaction. It is also known as face-to-face or a proximity payment transaction. An example is a transaction carried out at an ATM or a PoS terminal. A CNP transaction does not require the card to be physically presented at the point of transaction. It is also called as a remote transaction. An example is an online transaction or a mobile banking transaction using the card.
The limits on cash withdrawal at ATMs and for purchase of goods and services are decided by the card issuer. Within these limits, the card holder may set and modify transaction limits for various uses like domestic, international, PoS, ATMs, online transactions, contactless transactions, etc. Cash withdrawal using debit cards and full-KYC prepaid cards at PoS terminals has been allowed by Reserve Bank of India (RBI) whereby, a maximum of ₹2,000 can be withdrawn per transaction within an overall monthly limit of ₹10,000. Cardholders can check with their issuers for details of such facilities provided by them.
RBI has been taking various steps to ensure that the card payment environment is safe and secure. RBI has mandated issuers to send alerts for all card transactions so that a card holder is aware of transactions taking place on her / his card. In order to benefit from it, the cardholders are advised to register for SMS / e-mail alerts.
All CP and CNP transactions on cards issued in India are secured with AFA. This AFA can be in any form and few commonly used forms are PIN, dynamic one-time password (OTP), static code, etc. The requirement of AFA is not mandatory for transactions where outflow of foreign exchange is contemplated. Similarly, in case of CP transactions (except ATM transactions) using NFC contactless technology, transactions for a maximum value of ₹5,000 per transaction are allowed to be undertaken without AFA requirement, subject to adherence to EMV standards.
In case of CNP transactions, RBI has mandated providing AFA for domestic transactions. If a transaction has taken place without AFA and the customer has complained that the transaction is not effected by her / him, the issuer bank shall reimburse the loss to the customer without demur. Further, liability of a customer in case of an unauthorised electronic payment transaction is limited as per the provisions of RBI circulars DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 6, 2017, DCBR.BPD.(PCB/RCB).Cir.No.06/12.05.001/2017-18 dated December 14, 2017, and para 17 of Master Directions on PPIs dated August 27, 2021 (updated as on November 12, 2021).
These FAQs are issued by the Reserve Bank of India (hereinafter referred to as “Bank”) for information and general guidance purposes only. The Bank will not be held responsible for actions taken and / or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars, guidelines and notifications issued from time to time by the Bank.
You can generally seek a first time home loan for buying a house or a flat, renovation, extension and repairs to your existing house. Most banks have a separate policy for those who are going for a second house. Please remember to seek specific clarifications on the above-mentioned issues from your commercial bank.
Your bank will assess your repayment capacity while deciding the home loan eligibility. Repayment capacity is based on your monthly disposable / surplus income, (which in turn is based on factors such as total monthly income / surplus less monthly expenses) and other factors like spouse's income, assets, liabilities, stability of income etc. The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. The higher the monthly disposable income, higher will be the amount you will be eligible for loan. Typically a bank assumes that about 55-60 % of your monthly disposable / surplus income is available for repayment of loan. However, some banks calculate the income available for EMI payments based on an individual’s gross income and not on his disposable income.
The amount of the loan depends on the tenure of the loan and the rate of interest also as these variables determine your monthly outgo / outflow which in turn depends on your disposable income. Banks generally fix an upper age limit for home loan applicants.
You repay the loan in Equated Monthly Installments (EMIs) comprising both principal and interest. Repayment by way of EMI starts from the month following the month in which you take full disbursement. (For understanding how EMI is calculated, please see annex).
In addition to all legal documents relating to the house being bought, banks will also ask you to submit Identity and Residence Proof, latest salary slip ( authenticated by the employer and self attested for employees ) and Form 16 ( for business persons/ self-employed ) and last 6 months bank statements / Balance Sheet, as applicable . You also need to submit the completed application form along with your photograph. Loan applications form would give a checklist of documents to be attached with the application.
Do not be in a hurry to seal the deal quickly.
Please do discuss and seek more information on any waivers in terms and conditions provided by the commercial bank in this regard. For example some banks insist on submission of Life Insurance Policies of the borrower / guarantor equal to the loan amount assigned in favour of the commercial bank. There are usually amount ceilings for this condition which can also be waived by appropriate authority. Please read the fine print of the bank’s scheme carefully and seek clarifications.
generally offer either of the following loan options: Floating Rate Home Loans and Fixed Rate Home Loans. For a Fixed Rate Loan, the rate of interest is fixed either for the entire tenure of the loan or a certain part of the tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant. If a bank offers a Loan which is fixed only for a certain period of the tenure of the loan, please try to elicit information from the bank whether the rates may be raised after the period (reset clause). You may try to negotiate a lock-in that should include the rate that you have agreed upon initially and the period the lock-in lasts.
Hence, the EMI of a fixed rate loan is known in advance. This is the cash outflow that can be planned for at the outset of the loan. If the inflation and the interest rate in the economy move up over the years, a fixed EMI is attractively stagnant and is easier to plan for. However, if you have fixed EMI, any reduction in interest rates in the market, will not benefit you.
Determinants of floating rate:
The EMI of a floating rate loan changes with changes in market interest rates. If market rates increase, your repayment increases. When rates fall, your dues also fall. The floating interest rate is made up of two parts: the index and the spread. The index is a measure of interest rates generally (based on say, government securities prices), and the spread is an extra amount that the banker adds to cover credit risk, profit mark-up etc. The amount of the spread may differ from one lender to another, but it is usually constant over the life of the loan. If the index rate moves up, so does your interest rate in most circumstances and you will have to pay a higher EMI. Conversely, if the interest rate moves down, your EMI amount should be lower.
Also, sometimes banks make some adjustments so that your EMI remains constant. In such cases, when a lender increases the floating interest rate, the tenure of the loan is increased (and EMI kept constant).
Some lenders also base their floating rates on their Benchmark Prime Lending Rates (BPLR). You should ask what index will be used for setting the floating rate, how it has generally fluctuated in the past, and where it is published/disclosed. However, the past fluctuation of any index is not a guarantee for its future behavior.
Flexibility in EMI:
Some banks also offer their customers flexible repayment options. Here the EMIs are unequal. In step-up loans, the EMI is low initially and increases as years roll by (balloon repayment). In step-down loans, EMI is high initially and decreases as years roll by.
Step-up option is convenient for borrowers who are in the beginning of their careers. Step-down loan option is useful for borrowers who are close to their retirement years and currently make good money.
Borrowers benefit more from a loan that's calculated on a monthly reducing basis than on an annual basis. In case of monthly resets, interest is calculated on the outstanding principal balance for that month. The principal paid is deducted from the opening principal outstanding balance to arrive at the opening principal for the next month and interest is computed on the new, reduced principal outstanding. In case of annual resets, principal paid is adjusted only at the end of the year. Hence, you continue to pay interest on a portion of the principal that has been paid back to the lender.
The longer the tenure of the loan, the lesser will be your monthly EMI outflow. Shorter tenures mean greater EMI burden, but your loan is repaid faster. If you have a short-term cash flow mismatch, your bank may increase the tenure of the loan, and your EMI burden comes down. But longer tenures mean payment of larger interest towards the loan and make it more expensive.
This is a table that gives details of the periodic principal and interest payments on a loan and the amount outstanding at any point of time. It also shows the gradual decrease of the loan balance until it reaches zero. (See annex)
Sometimes loan is disbursed in installments, depending on the stages of completion of the housing project. Pending final disbursement, you may be required to pay interest only on the portion of the loan disbursed. This interest called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI.
However, many banks offer a special facility whereby customers can choose the installments they wish to pay for under construction properties till the time the property is ready for possession. Anything paid over and above the interest by the customer goes towards Principal repayment. The customer benefits by starting EMI payment earlier and hence repays the loan faster. Please check with your banker whether this facility is available before availing of the loan.
he security for a housing loan is typically a first mortgage of the property, normally by way of deposit of title deeds. Banks also sometimes ask for other collateral security as may be necessary. Some banks insist on margin / down payment (borrowers contribution to the creation of an asset) to be maintained / made also.
Collateral security assigned to your bank could be life insurance policies, the surrender value of which is set at a certain percentage to the loan amount, guarantees from solvent guarantors, pledge of shares/ securities and investments like KVP/ NSC etc. that are acceptable to your banker. Banks would also require you to ensure that the title to the property is free from any encumbrance. (i.e., there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely).
Ensure that the documents being provided to you are not colour photocopies. Check the internet for other modus operandi to fraud and ensure clear title to the asset. Seek advice only from authentic sources such as your bank.
Get the no encumbrance certificate to find the true title holder and if it is mortgaged to any financier. Obtain all tax papers to ensure that all documents are up to date.
Give yourself comfortable time. Do not hurry your purchase or loan in any case. Shopping around for a home loan will help you to get the best financing deal. Shopping, comparing, seeking clarification and negotiating with banks may save you thousands of rupees.
a) Obtain information from several banks
loans are available from mainly two types of lenders--commercial banks and housing finance companies. Different lenders may quote you different rates of interest and other terms and conditions, so you should contact several lenders to make sure you’re getting the best value for money.
Find out how much of a down payment you are required to pay, and find out all the costs involved in the loan (including processing fees, administrative charges and prepayment charges levied by banks). Knowing just the amount of the EMI or the interest rate is not good enough. Similarly, ask for information on loan amount, loan term, and type of loan (fixed or floating) so that you can compare the information and take an informed decision.
The following is some important information that you will require.
i) Rates
Ask your lender about its current home loan interest rates and whether the rate is fixed or floating. Remember that when interest rates in the economy go up so does the floating rates and hence the monthly re-payment.
If the rate quoted is a floating rate, ask how your rate and loan payment will vary, including the extent to which your loan payment will be reduced when rates go down by a certain percentage. Ask your lender to what index your floating home loan is referenced / linked and the periodicity of updation of that index. Also ask your bank whether the index is internal or external and how and where it is published.
Ask about the loan’s annual percentage rates (APR). The APR takes into account not only the interest rate but also fees and certain other charges that you may be required to pay, expressed as a yearly rate. Banks are obliged to reveal the APR if requested for by the customer.
ii) Reset Clause
Check the reset clause, especially in the case of fixed interest rate loan as the rates will not be fixed throughout the tenure of the loan.
iii) Spread/Mark up
Check if the margin in the case of the floating rate is fixed or variable. The rate of interest you have to pay will vary accordingly.
iv) Fees
A home loan often requires payment of various fees, such as loan origination or processing charges, administrative charges, documentation, late payment, changing the loan tenure, switching to different loan package during the loan tenure, restructuring of loan, changing from fixed to floating interest rate loan and vice versa, legal fee, technical inspection fee, recurring annual service fee, document retrieval charges and pre-payment charges, if you want to prepay the loan. Every lender should be able to give you an estimate of its fees. Many of these fees are negotiable / can be waived also.
Ask what each fee includes. Sometimes several components are lumped into one fee. Ask for an explanation of any fee you do not understand. Also, remember that most of these fees are perhaps negotiable! Do negotiate with your bank before agreeing to a particular fee. See how the all inclusive rate compares with the all inclusive rates offered by other banks. While planning your finances, don't forget to include the costs of stamp duty and registration.
v) Down Payments / Margin
Some lenders require 20/30 percent of the home’s purchase price as a down payment from you. However, many lenders also offer loans that require less than 20/30 percent down payment, sometimes as little as 5 percent .Ask about the lender’s requirements for a down payment and also negotiate with him to reduce the down payments.
b) Obtain the best deal
Once you know what each bank has to offer in terms of rates, fees and down payments, negotiate for the best deal. Ask the lender to write down all the costs associated with the loan. Then ask if the bank will waive or reduce one or more of its fees or agree to a lower rate. Do make sure that the bank is not agreeing to lower one fee while raising another or to lower the rate while raising the fees. Ask for clarification in case you do not understand any particular term. All banks are obliged to explain the most important terms and conditions of the home loan in detail.
Once you are satisfied with the terms you have negotiated, please do obtain a written offer letter from the lender and keep a copy with you. Read the offer letter carefully before signing.
Yes, most banks allow you to repay the loan ahead of schedule by making lump sum payments. However, many banks charge early repayment penalties up to 2-3% of the principal amount outstanding. Prepayment penalty may vary according to the reasons and source of funds - if you obtain a loan from another bank for pre-payment the charges are usually higher than when you pay from your own sources. However, you may credit more than your EMI amount into your loan account on a periodic basis and bring down your interest burden as and when funds are available with you. Most banks do not charge a pre-payment penalty if you deposit more than your EMI payable on a periodic basis. Please check such stipulations while availing the loan.
When other banks reduce the interest rate, you may prefer to close your account with the bank with whom you are banking, to avail of the loan from the bank offering reduced rates of interest. You have to pay pre-payment charges for doing so. In order to ensure that their customers do not approach other banks for availing reduced interest rates, banks allow customers to switch over from a higher interest loan to a lower interest loan by paying a switch over fees which is lesser than the pre-payment charges. Generally switchover fee is taken as percentage of the outstanding loan amount.
Keep up-dating yourself on various changes in the home loan market. Visit the branch, discuss with the officials to get the best out of any changes in the home loan scenario.
Yes. Resident Indians are eligible for certain tax benefits on both principal and interest components of a loan under the Income Tax Act, 1961. Under the current laws, you are entitled to an income tax rebate for interest repayment up to Rs. 1,50,000 /- per annum. Moreover, you can get added tax benefits under Section 80 C on repayment of principal amount up to Rs. 1,00,000 /- per annum.
a. At the time of sourcing the loan, banks are required to provide information about the interest rate applicable, the fees / charges and any other matter which affects your interest and the same are usually furnished in the product brochure of the banks. Complete transparency is mandatory.
b. The banks will supply you authenticated copies of all the loan documents executed by you at their cost along with a copy each of all enclosures quoted in the loan document on request.
A bank cannot reject your loan application without furnishing valid reason(s) for the same.
If you have a complaint against only scheduled bank on any of the above grounds, you can lodge a complaint with the bank concerned in writing in a specific complaint register provided at the branches as per the recommendation of the Goiporia Committee or on a sheet of paper. Ask for a receipt of your complaint. The details of the official receiving your complaint may be specifically sought. If the bank fails to respond within 30 days, you can lodge a complaint with the Banking Ombudsman. (Please note that complaints pending in any other judicial forum will not be entertained by the Banking Ombudsman). No fee is levied by the office of the Banking Ombudsman for resolving the customer’s complaint. A unique complaint identification number will be given to you for tracking purpose. (A list of the Banking Ombudsmen along with their contact details is provided on the RBI website).
Complaints are to be addressed to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. Complaints can be lodged simply by writing on a plain paper or online at www.bankingombudsman.rbi.org.in or by sending an email to the Banking Ombudsman. Complaint forms are available at all bank branches also.
Complaint can also be lodged by your authorised representative (other than a lawyer) or by a consumer association / forum acting on your behalf.
If you are not happy with the decision of the Banking Ombudsman, you can appeal to the Appellate Authority in the Reserve Bank of India.
The scheme of reverse mortgage has been introduced recently for the benefit of senior citizens owning a house but having inadequate income to meet their needs. Some important features of reverse mortgage are:
- A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.
- The property should be clear from encumbrances and should have clear title of the borrower.
- NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence.
- The amount of loan is based on several factors: borrower’s age, value of the property, current interest rates and the specific plan chosen. Generally speaking, the higher the age, higher the value of the home, the more money is available.
- The valuation of the residential property is done at periodic intervals and it shall be clearly specified to the borrowers upfront. The banks shall have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property.
- Married couples will be eligible as joint borrowers for financial assistance. In such a case, the age criteria for the couple would be at the discretion of the lending institution, subject to at least one of them being above 60 years of age.
- The loan shall become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out.
- On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs.
- As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.
- From FY 2008-09, the lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.
Note- Reverse mortgage is a fixed interest discounted product in reverse. It does not take into account the changes in interest rates as yet.
Important – This part is fine printed to help you practice reading the fine print. The loan agreement documentation runs into nearly 50 pages and its language is complex. If you thought everyone signs the same agreements with the bank, where is the need to read? You are not taking an informed decision. If you thought somebody would have pointed this to me if there was any problem, then maybe they did but you could not read or listen to it. Think again! Borrowers' and lenders' rights may not be expressed clearly in a transparent manner in all the loan agreements. The home loan agreement may not be provided to you in advance so that this could be read and understood before you sign the agreement. Every method may be used to delay handing over a copy to the borrower in sufficient time. Some areas you may focus are a) check the “reset clause” incorporated by some banks in their home loan agreements that allows them to change the interest rate in the future, even on fixed rate loans. Banks may set their reset clauses for 3 or 2 year intervals. They say a lender cannot have an agreement that a fixed rate is set for the entire tenure of 15 to 20 years as this will cause an asset-liability mismatch. Talk to your bank. b) Please seek clarifications on the term “exceptional circumstances” (if stated in the loan agreement) under which loan rates can be unilaterally changed by your bank. c) A common person thinks that default ideally means non-payment of one or more loan installments. In some loan documentation it can include divorce and death (in individual case) and even involvement in civil litigation or criminal offence. d) Does the loan agreement say that disbursement of the loan may be made directly to the builder or developer and in the case of a ready-built property to the vendor thereof and/or in such other manner as may be decided solely by bank? It is the borrower whose original property papers are retained with the bank, so why disburse to the builder. Possession of property has been delayed in some cases when the cheque was issued in the name of the builder and the builder refused to pay delay penalty to the borrower e) Does the agreement enable assignment of your loan to a third party? You take into account reputation and credibility of the bank before entering into a loan agreement with it. Are you comfortable with third party takes over or should you also be allowed to move your home loan from one bank to another in that case? Look for ambiguous clauses and discuss with the banker. Some agreements say changes in employment etc. have to be informed well in advance without quantifying the term “well in advance”. f) In one case the loan documentation says “issuance of pre-approval letter should not be construed as a commitment by the bank to grant the housing loan and processing fees is not re-fundable even if the home loan is not processed”. This is never ending it seems. The above are only indicative instances of what has been observed / reported/ indicated by various sources. However, our main objective was to get you into the habit of reading the fine print. If you have read this, you would have understood the importance of reading fine print in any document and we have achieved our objective. I only wish I could have made the print smaller as in the real cases.
The Reserve Bank - Integrated Ombudsman Scheme, 2021 (RB-IOS, 2021/ the Scheme) was launched on November 12, 2021. It integrates the erstwhile three Ombudsman schemes of RBI namely, (i) the Banking Ombudsman Scheme, 2006; (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019. These schemes had limited and different grounds of complaints and limited coverage of REs, apart from jurisdiction related restrictions. RB-IOS, 2021 provides for cost-free redress of customer complaints involving deficiency in services rendered by entities regulated by RBI, if not resolved to the satisfaction of the customers or not replied to within a period of 30 days by the RE.
In addition to integrating the three existing schemes, the Scheme also includes under its ambit additional REs, namely, Non-Scheduled Primary (Urban) Co-operative Banks with a deposit size of ₹50 crore and above and Credit Information Companies. The Scheme adopts ‘One Nation One Ombudsman’ approach by making the RBI’s Ombudsman mechanism jurisdiction neutral.
The AGR Framework of RBI comprises of RBI Ombudsmen (RBIOs), Consumer Education and Protection Cells (CEPCs) and CEPD. The RBIOs function under the framework of RB-IOS, 2021. The CEPCs take up complaints against REs not falling under the ambit of RB-IOS, 2021. CEPD provides assistance to the Appellate Authority (AA) under the RB-IOS and processes the appeal cases.
RB-IOS, 2021 covers all commercial banks, Non-Banking Financial Companies (NBFCs), Payment System Participants, most Primary (Urban) Cooperative Banks, and Credit Information Companies. The REs covered under the RB-IOS, 2021 are listed under Question 11.
An RBI Ombudsman is a senior official of RBI appointed by RBI to redress the complaints from customers of the REs against “deficiency in service”, as defined under Clause 3(1)(g) of the RB-IOS, 2021.
“Deficiency in service” means a shortcoming or an inadequacy in any financial service or such other services related thereto, which the RE is required to provide statutorily or otherwise, which may or may not result in financial loss or damage to the customer.
A Deputy Ombudsman is a senior officer appointed by RBI to assist the RBI Ombudsman (refer Question 4) in matters of resolution of complaints and in handling certain complaints and the functions entrusted under the Scheme. The Deputy Ombudsman endeavors to promote settlement of a complaint by agreement between the complainant and the RE through facilitation or conciliation or mediation and dispose complaints as discussed in Question 24.
RB-IOS, 2021 has simplified the processes, centralized the receipt of physical and email complaints, brought more REs under its ambit, done away with limited grounds of complaints and difference jurisdictions of Ombudsmen and now all complaints involving deficiency in service are covered under RB-IOS. Complainants can lodge their complaints against an RE on the 24x7 online CMS portal at https://cms.rbi.org.in/ or send their complaint in email/physical form to CRPC (refer Question 16). Salient benefits for the complainant arising from the RB-IOS with upgraded CMS portal are as under:
Centralised Receipt and Processing Centre (CRPC) has been set up at RBI, Chandigarh for receiving complaints through physical mode (letter/post). The CRPC undertakes initial scrutiny and processing of these complaints, uploads them on CMS, which are then assigned to Offices of RBI Ombudsmen (ORBIOs) or CEPCs for redressal. Please refer to Question 15 and 16 for further details.
The Contact Center of RBI is a platform where a complainant can reach out to RBI to get information related to AGR mechanism of RBI, procedure of or help in filing complaints and to ascertain the status of the complaint lodged with RBI. The contact center with Interactive Voice Response System (IVRS) with Toll Free #14448 is available 24x7, while the facility to connect to Contact Centre personnel is available from 8:00 AM to 10:00 PM (weekdays except National Holidays) for English and Hindi, and in ten Regional Languages (Assamese, Bengali, Gujarati, Kannada, Marathi, Malayalam, Odia, Punjabi, Telugu and Tamil) from 9:30 AM to 5:15 PM.
No, complaints cannot be filed through Contact Center, but the Contact Centre can assist the complainant in filing the complaint through CMS portal or physical mode. It will also provide clarifications about/ details of the AGR mechanism set up by RBI.
Presently, Offices of RBI Ombudsmen (ORBIOs) are functioning from 22 locations across India. However, the complainants need not contact/ approach any specified ORBIO for filing a complaint under the RB-IOS, 2021. The complaints lodged directly online through CMS Portal (https://cms.rbi.org.in) are automatically allocated to different RBI Ombudsmen for redressal upon registration of the complaint. Physical and email complaints are processed and entered in CMS for further processing, after seeking further information/ details, if missing, from the complainant.
The following REs of RBI are covered under the RB-IOS, 2021:
(i) Banks: All commercial banks, including Public Sector Banks, Private Sector Banks, Foreign Banks, Local Area Banks, Small Finance Banks, Payment Banks, Regional Rural Banks, Scheduled Primary (Urban) Co-operative Banks and Non-scheduled Primary (Urban) Co-operative Banks with deposit size of ₹50 Crore and above, as on the date of the audited balance sheet of the previous financial year;
(ii) NBFCs registered with RBI: All Non-Banking Financial Companies (excluding Housing Finance Companies) which (a) are authorized to accept deposits; or (b) have customer interface, with an assets size of ₹100 crore and above as on the date of the audited balance sheet of the previous financial year;
Note: Core Investment Companies, Infrastructure Debt Fund-Non-banking Financial Companies, Non-Banking Financial Companies-Infrastructure Finance Companies, companies in resolution or winding up / liquidation, or any other NBFC specified by RBI are excluded from the ambit of the RB-IOS, 2021.
(iii) System Participants: All Payment System Participants - banks as well as non-banks regulated by RBI are covered under the RB-IOS, 2021. These entities issue Prepaid Payment Instruments (PPIs) and facilitate transactions over National Electronic Funds Transfer (NEFT) / Real Time Gross Settlement (RTGS) / Immediate Payment Service (IMPS) / Unified Payments Interface (UPI) / Bharat Bill Payment System (BBPS) / Bharat QR Code / *99# mobile transaction service using Unstructured Supplementary Service Data (USSD) / Aadhaar Enabled Payment System (AePS), etc.
(iv) Credit Information Companies: All Credit Information Companies as defined in the Companies Act, 2013 (18 of 2013) and granted a Certificate of Registration under sub-section (2) of section 5 of the Credit Information Companies (Regulation) Act, 2005 (30 of 2005).
The list of entities, periodically updated, covered under the RB-IOS, 2021 is available at https://cms.rbi.org.in/cms/assets/Documents/RBIO_English_Portal.pdf.
The complaints pertaining to the REs not covered under the RB-IOS, 2021 are forwarded to CEPCs of RBI (currently located at 30 RBI Offices) for resolution. Such complaints can also be filed on the portal or address as per details given in Question 16. The complainant would be notified of the same through SMS and e-mail on the mobile number and email id provided at the time of filing the complaint.
All complaints involving ‘deficiency in service’ on the part of the RE, except for those listed under Question 14 below are handled under the RB-IOS, 2021. ‘Deficiency in service’ has been defined in RB-IOS, 2021 as ‘any shortcoming or inadequacy in any financial service, which the Regulated Entity of RBI is required to provide statutorily or otherwise, which may or may not result in financial loss or damage to the customer’.
Certain types of complaints which are classified as non-maintainable complaints due to various reasons as indicated below are not covered under RB-IOS, 2021:
- i. Complaints which are filed directly with the Ombudsman without first being taken up with the RE concerned, in writing.
- ii. Complaints which have been lodged with the RE, but a period of 30 days has not elapsed from such date of lodgment of the complaint with the RE, except for complaints for which the complainant has received a reply from the RE, and is not satisfied with the reply.
- iii. Complaint made after one year from the date of receipt of the reply of the RE or, where no reply is received, later than one year and 30 days after the date of the representation to the RE;
- iv. Complaints which have been already dealt with by Ombudsman/ CEPC or those under process/pending on the same cause of action and for similar relief (whether received from the same complainant or along with one or more complainants) with the RBIO;
- v. Complaints related to the commercial decision of the RE. For example: grant of a loan;
- vi. Complaints related to any dispute between a vendor and a RE;
- vii. Complaints addressed to other authorities and not directly addressed to Ombudsman;
- viii. Complaints raising general grievances against the management or executives of RE;
- ix. Complaints pertaining to a dispute in which action initiated by a RE is in compliance of the orders of a statutory or law enforcing authority;
- x. Complaints in which the alleged deficiency in the service relates to an entity not regulated by RBI;
- xi. Complaints related to the disputes between REs;
- xii. Complaints related to any dispute involving employee-employer relationship of RE;
- xiii. Complaints pending before any Court, Tribunal or Arbitrator or any other forum or authority; or, settled or dealt with on merits, by any Court, Tribunal or Arbitrator or any other forum or authority, whether or not received from the same complainant or along with one or more of the complainants/parties concerned;
- xiv. Complaints that are abusive or frivolous or vexatious in nature;
- xv. Complaints made after the expiry of the period of limitation prescribed under the Limitation Act, 1963, for such claims;
- xvi. Complaints with incomplete details and those that are not specific/actionable in nature;
- xvii. Complaints lodged through an advocate (except where the advocate himself is the aggrieved person);
- xviii. Complaint in the nature of offering suggestions or seeking guidance or explanation.
For redress of his grievance, the complainant must first approach the concerned RE. If the RE does not respond within a period of 30 days after lodgment of the complaint or rejects the complaint wholly/partly or if the complainant is not satisfied with the response/resolution given by the RE, the complainant can lodge his complaint under the RB-IOS, 2021.
Approaching the RBI Ombudsman without first lodging a complaint with the RE or doing so before 30 days after lodging the complaint, if there is no response from the RE, would make the complaint non-maintainable under RB-IOS, 2021.
It may be noted that the complaint should be made to the RBI Ombudsman not later than one year after receiving the reply of the RE or, in cases where no reply is received, not later than one year and 30 days after the date of the representation to the RE.
A complaint can be filed through any of the following methods:
- i. Online - on CMS portal of RBI at https://cms.rbi.org.in.
- ii. Physical complaint (letter/post) in the form as specified in Annexure ‘A’ in the Scheme to “Centralised Receipt and Processing Centre, 4th Floor, Reserve Bank of India, Sector -17, Central Vista, Chandigarh - 160017”.
- iii. Complaints with full details (please refer to Question 17 below) can be sent by email (crpc@rbi.org.in).
The complainant is required to provide the following details
- i. Name of the complainant, age and gender;
- ii. Full postal address of the complainant with personal e-mail ID, mobile number (mandatory to receive notifications), and landline number (if available);
- iii. Name and address of the branch or office of the RE against which the complaint is filed;
- iv. Complete facts giving rise to the complaint, including, transaction date and details, the details of the complainant’s account number, debit card or credit card number to the extent that they are relevant to the subject matter of the complaint;
- v. Date and details of the representation submitted to the RE for redressal of grievance and reply, if any, received from the RE;
- vi. The nature and extent of the loss caused to the complainant; and
- vii. The relief sought; along with
- viii. Declaration that the complaint is not non-maintainable as per Clause 10 of the RB-IOS 2021.
Note: The complainant shall submit, along with the complaint, copies of the relevant documents supporting the complaint.
After a complaint gets successfully registered, it is assigned a complaint number. An acknowledgement indicating this complaint number is sent to the complainant through SMS on the mobile number and through e-mail at the email id provided at the time of filing the complaint. The status of the complaint can be checked by using the mobile number and the complaint number (received on the mobile) through the following link: https://cms.rbi.org.in.
The status of the complaint can also be ascertained by the complainant from the Contact Centre at CRPC, Chandigarh by contacting the toll-free number 14448.
Yes. A complaint can be filed through an authorized representative of the complainant (other than through an advocate). Such complaints should be submitted along with an authorization in the Form prescribed in the Scheme {containing details of the representative, i.e. Name, address, mobile number (mandatory to receive notifications) and e-mail}.
The speed of redress depends on a number of factors like complexity of the case, timely submission of documents by the RE, volume of complaints in Ombudsman offices etc.
However, under the new System, CMS sends instant notifications to the complainant and RE and functions as single point reference for all complaint related communication for both parties, thereby obviating undue delays. All other things remaining the same, complaints lodged on CMS directly with all details get speedier redress.
No. There is no charge or fee for a customer of the RE for filing or for resolving complaints under the RB-IOS, 2021. Further, complainants need not approach any third-party agency to file a complaint with RBI Ombudsman or pay any fee. Complainants can register their complaints by themselves or through a representative through any of the modes mentioned in Question 16 absolutely free of cost.
There is no limit on the amount of disputed transaction for which the complaint/grievance can be raised under RB-IOS, 2021 and on which the RBI Ombudsman can provide resolution. However, only those complaints where the compensation sought, if any, for any loss suffered by the complainant arising directly out of the act or omission or commission of the RE, is ₹20 lakh or lower are admissible under RB-IOS. In addition, the Ombudsman can also provide compensation upto ₹1 lakh for mental agony/ harassment etc., suffered by the complainant as indicated in the Question 23.
The Ombudsman may award a compensation not exceeding ₹1 lakh to the complainant for loss of the complainant’s time, expenses incurred, harassment and mental anguish suffered by the complainant.
On receipt of a complaint, it is scrutinized to assess whether it is a maintainable or a non-maintainable complaint (as explained in Question 14). If found non-maintainable, the complaint is closed, and a suitable communication is issued to the complainant.
For a maintainable complaint, the RBI Ombudsman endeavors to promote resolution by agreement between the complainant and the RE. If an amicable settlement of the complaint is arrived at between the parties, the same is recorded and signed by both the parties. As the parties have agreed to the settlement by affixing their signature on it, it becomes binding on both the parties and no formal Award is issued by the Ombudsman.
If the matter is not resolved through settlement (facilitation or conciliation or mediation) the Ombudsman, after allowing the parties a reasonable opportunity (and based on records placed before him, principles of banking law and practice, directions, instructions and guidelines issued by RBI from time to time and such other factors which in his opinion are relevant for deciding the complaint), may pass an Award (directing the Regulated Entity for specific performance) or reject the complaint (if the RE is found to have adhered to the extant norms and practices in vogue). The outcome of the complaint is communicated to both the complainant and the RE.
Yes, the conciliation meeting can be held virtually either through the Video Conferencing facility of RBI, for which one may have to visit the nearest RBI Office, or from any nearby branch of the concerned bank or through platforms like WebEx etc. in consultation with the RBI Ombudsman office, and subject to the requirement given by the Office of RBI Ombudsman. Audio Conference calls are also possible.
Yes. As per Clause 16 of the RB-IOS, 2021, the RBI Ombudsman may reject a complaint at any stage, if the complaint:
- i. is non-maintainable under Clause 10 of the RB-IOS, 2021;
- ii. is in the nature of offering suggestions or seeking guidance or explanation;
- iii. in the opinion of the Ombudsman there is no deficiency in service;
- iv. the compensation sought for the consequential loss is beyond the power of the Ombudsman to award as indicated in RB-IOS, 2021 (please refer to Question 22);
- v. the complaint is not pursued by the complainant with reasonable diligence;
- vi. the complaint is without sufficient cause;
- vii. the complaint requires consideration of elaborate documentary and oral evidence and the proceedings before the Ombudsman are not appropriate for adjudication of such a complaint;
- viii. in the opinion of the Ombudsman there is no financial loss or damage, or inconvenience caused to the complainant.
The Deputy Ombudsman can reject a complaint only on the following grounds:
- i. the complaint is non-maintainable under Clause 10 of the RB-IOS, 2021;
- ii. the complaint is in the nature of offering suggestions or seeking guidance or explanation.
If the Ombudsman is satisfied that there is deficiency of service on the part of the RE and the complaint is not settled by agreement within a specified period as allowed by the Ombudsman, the RBI Ombudsman may pass an Award, if applicable. Before passing an Award, the Ombudsman provides a reasonable opportunity to the complainant and the RE to present their case.
The complainant may accept the Award in full and final settlement or reject it. However, if he wishes to accept the Award, it is mandatory that the complainant submits his letter of acceptance to the RE concerned within 30 days, failing which, the Award will lapse.
In case the RE does not comply with the decision of the RBI Ombudsman within a reasonable time as may be decided by the RBI Ombudsman, the Ombudsman can pass an Award, if there are obvious deficiencies in service. An Award has to be complied with by the RE, unless appealed, within 30 days of the complainant accepting the Award.
Cases that look similar prima-facie may vary in terms of facts and circumstances. However, to bring greater consistency in decisions, deliberations among Ombudsmen are held regularly.
Yes, the RB-IOS, 2021 provides for an appellate mechanism for the complainant as well as the RE for complaints closed under appealable Clauses of the Scheme. Any person aggrieved by an Award (except the RE in respect of Awards issued for non-furnishing of appropriate and satisfactory information within the stipulated time) or rejection of a complaint under an appealable clause, i.e. Sub-clauses (c) to (f) of Clause 16(2) of the Scheme, can file an appeal before the Appellate Authority in RBI, within 30 days of the date of receipt of communication of the Award (or acceptance of the award by the complainant1 in case of RE) or rejection of the complaint.
The powers of Appellate Authority are vested with the Executive Director-in-charge of Department of RBI implementing the Scheme. The address of the Appellate Authority is:
The Appellate Authority
Reserve Bank - Integrated Ombudsman Scheme, 2021
Consumer Education and Protection Department
Reserve Bank of India
First Floor, Amar Building, Fort, Mumbai 400 001.
An appeal can be filed through the CMS Portal (https://cms.rbi.org.in) for a closed complaint. Alternatively, the appeal can also be sent vide e-mail at aaos@rbi.org.in.
Further, if the complainant is not satisfied with the resolution provided by the Ombudsman, he/she is at liberty to explore other recourses and/or remedies available, as per law.
Complaints that are closed under Clause 10 (non-maintainable complaints closed at CRPC), Clause 14 (complaints closed through facilitation or mediation or conciliation), Clause 16(1) (non-maintainable complaints closed at ORBIOs), Clause 16(2)(a)/(b) (complaints rejected on the basis of ‘no deficiency of service’ or ‘the compensation sought for the consequential loss is beyond the power of the Ombudsman to award the compensation’) of the RB-IOS, 2021 are not appealable before the Appellate Authority by the complainant or the RE. Further, REs do not have the right to appeal against Awards issued for non-furnishing of documents/information under Clause 15(1)(a) of the RB-IOS, 2021.
An appeal can be filed against the Award or the decision of the RBI Ombudsman rejecting the complaint closed under appealable clauses, within 30 days of the date of receipt of communication of Award or rejection of the complaint. The Appellate Authority, if satisfied that the applicant had sufficient cause for not making an application for appeal within the specified time, may also allow a period of extension not exceeding 30 days.
The Appellate Authority, after examining the appeal and related documents, may act as given under:
Further, the orders of the Appellate Authority shall have the same effect as the Award passed by the RBI Ombudsman or the order rejecting the complaint, as the case may be.
Yes. A complaint can be withdrawn at any stage by the complainant under the Scheme. For withdrawing a complaint, one can log on to the Complaint Management System portal (https://cms.rbi.org.in) and go to the tab “Track a complaint”.
The Scheme is available at the following link https://rbidocs.rbi.org.in/rdocs/content/pdfs/RBIOS2021_amendments05082022.pdf.
Yes. Complainants can log on to RBI’s CMS portal (https://cms.rbi.org.in) and can share their feedback under the tab “Feedback”. This feedback is analyzed at RBI for further improving the grievance redress under RB-IOS, 2021.
The online portal (https://cms.rbi.org.in) enables filing of complaint in two languages i.e. Hindi and English. However, facts/description of the complaint can be typed, copied and pasted in description box, in any language for upto 2,000 characters. However, the physical and email complaints can be filed in any language.
Considering that a large number of customer complaints emanate on account of unsuccessful or ‘failed’ transactions, RBI has issued a circular dated September 20, 2019 on Harmonisation of Turn Around Time (TAT) and customer compensation for failed transactions using authorised Payment Systems wherein the TAT is prescribed for reversing the funds in case of failed transactions. Further, the circular also prescribes a compensation mechanism if there is a delay on the part of Regulated Entity to reverse the funds. The details of the circular are available at https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11693.
Customers must report to the bank immediately after noticing any unauthorized transactions in their accounts. Delay in reporting reduces their chance of getting the money back.
In terms of RBI circular on Limiting Liability of Customers in Unauthorised Electronic Banking Transactions dated July 06, 2017, zero liability of the customer shall arise if:
Limited Liability of a Customer
A customer shall be liable for the loss occurring due to unauthorized transactions in the following cases:
In terms of Master circular on Customer Service in Banks dated July 1, 2015 , banks are advised to have a board approved policy providing infrastructure facilities by branches by bestowing particular attention to providing adequate space, proper furniture, drinking water facilities, with specific emphasis on pensioners, senior citizens, disabled persons, etc. Further, Banks are advised to include senior citizens preferably in Branch Level Customer Service Committee.
In terms of Statement on Developmental and Regulatory Policies - October 4, 2017- Banking Facility for Senior Citizens and Differently abled Persons dated November 9, 2017 banks are required to put in place appropriate mechanism with the following specific provisions:
Disclaimer - These FAQs are issued by the RBI for information and general guidance purposes only, which cannot be quoted in any legal proceeding and will have no legal purpose. It is not intended to be treated as legal advice or legal opinion. The Reserve Bank will not be held responsible for actions taken and/or decisions made on the basis of the same. For clarifications or interpretations, if any, readers are requested to be guided by the RB-IOS, 2021
