More bank branches needed to optimise NECS use: RBI

Written by fe Bureau | Mumbai | Updated: Jun 27 2009, 02:59am hrs
The Reserve Bank of India (RBI) on Thursday,noted that to optimally use the reach and potential of national electronic clearing service (NECS), banks need to increase the number of branches enabled to participate in NECS.

Ideally, all core-banking-enabled branches should be part of NECS. Since the branches participating in real time gross settlement (RTGS) system or national electronic funds transfer (NEFT) system, number over 55,000, there is immediate scope for banks to double the number of branches offering NECS, said the RBI in a notification.

Banks also need to increase their level of participation by enthusing more users to tap the benefits offered by NECS, it added.

Hence, the RBI has advised banks to include, at a minimum, all the NEFT-enabled branches in NECS. Target should be to include all the core-banking-enabled branches in NECS.

The RBI has also advised banks to educate their corporate customers and guide them in preparing a single NECS file, for credit to beneficiaries having accounts across the country with destination branches participating in NECS.

Banks need a mechanism to electronically collect NECS files sponsored by different branches on behalf of their corporate customers, across the country.

There is also a need for efficient handling of inward NECS transactions.

Banks should put in place proper interfaces for straight-through-processing of inward files received from the clearing house, said the RBI.

It added that uncredited items, if any, should be reported back to the clearing house within the prescribed time limit.