Rbi Diktat On Nostro Account Outstandings

The Reserve Bank of India (RBI) has asked banks to write-off or transfer to unclaimed deposit accounts, all outstanding unreconciled entries in the nostro accounts maintained with their branches and correspondents abroad.

RBI has also asked the banks to ensure that all outstanding unreconciled entries in such accounts are followed up vigorously and reconciled as soon as possible.

Banks would have to ensure that in no case any entry of $ 10,000 or above remains outstanding beyond six months. Moreover, unreconciled debit entries will have to be transferred to the banks profit and loss account.

Banks always had to reconcile the balances in their nostro accounts as appearing in their local books with the balances actually advised by their overseas correspondents.

 

They also had to maintain records to show that such reconciliations are made. Earlier, write-offs of such entries required the central banks permission.

According to the new notification issued recently, the Reserve Bank of India has allowed banks to write off the unclaimed deposit accounts subject to certain conditions being met.

1 The entry should be outstanding for at least two years despite the steps taken by the bank for its reconciliation.

2 The bank must obtain approval from its board or a competent authority for entries proposed to be written off or transferred to unclaimed deposit accounts.

3. The debit entries should be adjusted by transfer to profit and loss account and credit entries should be transferred to unclaimed deposit accounts.

4. A proper record of all such entries is maintained separately for future reference.

5. The transactions are to be reported to the RBI. RBI has also asked dealers to submit half yearly accounts relating to reconciliation of nostro accounts in a single statement (REC as against REC I and REC II earlier) on a half-yearly basis.

6. The statements will have to show the position of unreconciled entries in foreign currency accounts abroad. The statements would have to reach RBI before April 30 and October 21 respectively.