Welcome..!

A humble welcome to my learning world..! ✌

I am Manoj Chitta, a BFSI enthusiast. I firmly believe that the best way to learn is by sharing the knowledge I have. My current occupation as a Business Analyst in the software industry has put me on a learning trajectory in the BFSI domain.

Every day there are new software engineers joining this ever-growing ever-changing domain. I thought I could share whatever I know about BFSI via. a series of articles. Please feel free to post any questions you might have on these articles as it would add value to me and other readers.

Once again welcome. Hope you find it helpful. 

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SWIFT MT – SERIAL AND COVER METHOD

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  SWIFT MT – Serial and Cover Method This is one of the most important articles from SWIFT payments’ perspective and it is critical that you fully understand the concepts laid out here. Payments are cleared and settled via 2 primary methods: Through a payment market infrastructure (PMI) Through correspondent banking Through payment market infrastructure: This is the case where bank A and bank B are direct participants of this PMI aka CSM. IN General usage the concept of serial and cover does not apply here but if you put a gun to my head, I would say is very close to the serial method. Through correspondent banking: This is the case where banks open accounts with each other (Nostro/Vostro) and settle funds directly. The prerequisite here is that banks need to open accounts with each other or in other words they need to have an  accounting relationship  with the other bank. Now, let us try to understand the connection between sending/receiving SWIFT messages and the moveme...
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SEPA CREDIT TRANSFER – REJECT FLOW

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  SEPA Credit Transfer – Reject flow : Even though the happy path is the most common case, there are always exceptions and the different parties in an SCT payment chain can reject the payment due to several reasons. The status of the payment has to be conveyed to the ordering customer so that corrective action can be taken. Let us try to understand who are all the parties that can send Rejections and how they do it Reject definition:  “A ‘ Reject’  occurs when a SEPA Credit Transfer is not accepted for normal execution before inter-PSP Settlement. ” – EPC rule book. The main point to note here is that a payment is rejected before the settlement of the payment happens between banks. In case the payment is settled then the payment has to be Returned (we will get to this in the next article). Ordering bank (Originator PSP):  Upon receiving a Pain.001, the ordering bank (Originator PSP) will start processing the instruction and may decide to reject the pay...
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SEPA CREDIT TRANSFER – RECALL FLOW

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  Sepa Credit Transfer – Recall flow : SEPA credit transfer – recall is a process through which an Originator or Originator PSP wants to cancel or get back the funds of an earlier credit transfer that was sent. Both the Originator and the Originator PSP can recall the payment for several reasons and here are some of them Originator: payment sent with incorrect information Wrong amount Payment sent to the wrong party Originator PSP: A duplicate message sent Fraudulent credit transfer message sent There are different parties in the payment chain and let us see how the different parties react to the recalls. It is important to note that when Originators initiate a recall they communicate to their PSP either via a payment message or email/phone call/branch visit. PSPs on the other hand send a message directly. Whenever an Originator initiates a recall request then it does not guarantee them the funds will be returned. There are 3 sub-flows within a recall flow: Payment not settled Posi...
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