To improve monitoring of accounts that are opened by a bank with an overseas bank in the currency of the foreign country, the Reserve Bank of India (RBI) today said banks should try to minimise the number of such accounts.
"Banks are also advised to leverage technology to avoid building up of such unreconciled balances," RBI said while relaxing the norms for reconciliation of nostro account and treatment of outstanding entries.
Nostro accounts are opened by a bank with an overseas bank in the currency of the foreign country.
The RBI further said the banks should "minimise the number of nostro accounts to have a better control over reconciliation and put in place a system of past reconciliation and close monitoring of pending items... By top management at short intervals".
While easing the norms for treatment of outstanding entries, the central bank said in case the amount exceeds $2,500, banks will have to make efforts for reconciliation.
However, in case of credit entries of less than $2,500, banks could transfer the amount to general reserves and make appropriate disclosure in books of accounts.
The banks, RBI said, will have to honour future claims with regard to amounts transferred to the general reserves.