RBI to implement special electronic fund transfer system from today for smooth switchover
Stock exchanges will graduate to the T+2 settlement system of trading tomorrow. To ensure a smooth switchover, the Reserve Bank of India has proposed to implement a new system called special electronics fund transfer (SEFT), effective April 1.
Sebi chairman GN Bajpai said the T+2 plan is on schedule and the regulator is ready to embrace the new regime.
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The stock exchanges had adopted T+3 under rolling settlement since April 2002 onwards. Until then the bourses were following T+5 settlement, prior to which it was a weekly settlement period.
SEFT will function through electronically networked branches of various banks. A Securities and Exchange Board of India (Sebi) release said the SEFT will enable fund transfer within two hours.
There is no minimum limit on the amount to be transferred through SEFT, though there is an initial cap of Rs 2 crore per transfer. For larger amounts, however, multiple transfers at a time are permitted in the same settlement.
Currently, there are 2,500 branches of 24 banks in 496 centres that are networked or linked to SEFT with at least one bank branch at each of these centres.
Though the lacunae of fund transfer has been addressed to a certain extent, the issue of straight through processing (STP) and issuance of electronic contract notes have yet to be addressed.