Home › Circulars › RBI/2007-2008/261

Mandatory electronic payments for large-value transactions

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2007-2008/261 · issued 10 Mar 2008 · ~1 min read

Quick answerFrom April 1, 2008, all payments of ₹1 crore and above between RBI-regulated entities (banks, primary dealers, NBFCs) and in regulated markets must use RTGS, NEFT, or ECS. Paper-based instruments are no longer allowed for such transactions.

The rule, in the simplest words

From April 1, 2008, any payment of ₹1 crore or more between banks, primary dealers, or NBFCs must be done using electronic systems like RTGS, NEFT, or ECS.
Paper cheques or drafts are not allowed for such big payments anymore.
This rule also covers payments in money markets, government securities markets, and foreign exchange markets.
The change is to make payments safer and faster by avoiding the risks of paper-based clearing.
Banks must confirm they have started following this rule.

How it plays out — a real example

Rajesh, a treasury manager at a commercial bank, receives a ₹2 crore payment instruction from an NBFC. He ensures the funds are transferred via RTGS instead of issuing a demand draft, as per the new mandate, avoiding clearing delays.

What changed

RBI made it mandatory for all large-value payments (₹1 crore and above) between regulated entities and in regulated markets to be routed through electronic payment systems (RTGS, NEFT, ECS). This replaces the earlier practice where paper instruments were commonly used for such bulk payments, which carried clearing cycle risks.

What it means for you

Banks and other regulated entities must stop processing paper-based payments of ₹1 crore or more. This reduces settlement risk and speeds up fund transfers. Lenders need to upgrade their systems to handle mandatory electronic routing and ensure compliance by the deadline.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Ensure all payment transactions of ₹1 crore and above between banks, primary dealers, and NBFCs are routed through RTGS, NEFT, or ECS from April 1, 2008.
Update internal payment processing systems to reject paper-based instruments for such large-value transactions.
Train staff on mandatory electronic payment procedures and monitor compliance.
Confirm receipt of this directive and report action taken to RBI.

Who it affects

All commercial and cooperative banks, Primary dealers, Non-banking financial companies (NBFCs), Entities in money, government securities, and foreign exchange markets

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-07-30 04:04 IST
Status change: withdrawn 05 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What payment systems are allowed for large-value transactions?

Only RTGS, NEFT, and ECS are permitted for payments of ₹1 crore and above between RBI-regulated entities.

When does this rule take effect?

The mandate applies from April 1, 2008, for both inter-entity payments and market transactions.

Does this apply to payments below ₹1 crore?

No, the mandate is only for transactions of ₹1 crore and above. Smaller payments can still use paper instruments.

📜 Read the original circular — full text as issued by RBI

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications Withdrawn with effect from November 16, 2021, February 18, 2022, May 02, 2022, May 13, 2022, May 21, 2024, July 12, 2024 & October 01, 2024 ( 579 kb ) Use of electronic mode of payment for large value transactions RBI/2007-2008/261 DPSS No. 1407 / 02.10.02 / 2007-2008 March 10, 2008 The Chairman & Managing Director / Chief Executive Officers of all commercial and co-operataive banks Dear Sir / Madam Use of electronic mode of payment for large value transactions Recognising the importance of ensuring the safety and security of the payment systems, Reserve Bank of India (RBI) has put in place three modes of electronic payments i.e. Real time Gross Settlement (RTGS) System, National Electronic Fund Transfer (NEFT) System and Electronic Clearing Service (ECS). Payments through these modes have been steadily growing in the last few years. 2. However, there are still a large number of bulk payments which are made through paper instruments. Banks also face attendant risks of routing such payments which have to under go the process of a clearing cycle. Recently, an internal Working Group set up by the RBI had examined various issues related to migration from paper-based systems to electronic systems and had recommended a phased approach of encouraging, monitoring and mandating. Based on the recommendations of the Group, an approach paper was placed on RBI website inviting comments from the members of public on the need for making the payment transactions of Rs. 1 crore and above between RBI regulated entities to be mandatorily routed through electronic payment systems. 3. The comments received from the stake holders have since been examined. The proposal has been found to be generally acceptable. In view of this, it is now decided to make large value payments of Rs.1 crore and above mandatory to be routed through electronic payment mechanism with time frame as under: Type of transactions Time frame (i) All payment transactions of Rs. 1 crore and above between the RBI regulated entities such as banks, primary dealers and NBFCs 1st April 2008 (ii) All payments of Rs. 1 crore and above in RBI regulated markets such as money market, Government securities market and foreign exchange market 1st April 2008 Please acknowledge receipt and confirm having initiated action. Yours faithfully, (Arun Pasricha) General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/261 · issued 10 Mar 2008. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4077&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.