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Project to cut electronic transfer time gets good progress report

A project to reduce the time for electronic bank transfers from one day to at most four hours by the middle of 2012 is progressing well, the committee overseeing the project said in a monitoring report on Monday.

The first tests of the transfer system have been successfully completed and interbank clearing house Giro together with the 54 banks participating in the project will now start fine-tuning, the National Bank of Hungary (NBH) said in a summary of the report. Transfer time could be as short as two hours during business hours, according to the report.

A decree published by the central bank a little more than a year ago stipulates the reduction in transfer time by July 1, 2012.

Currently, Hungarian banks must complete domestic paperless forint transfers with next day (T+1) settlement, if the sender initiated the order before the initiating bank’s cut-off time - the time before which it accepts transfer orders as those having arrived on the given day - and the receiving account is at a different bank. The cut-off time may not be earlier than two hours before the bank’s closing time.

The transfer must be completed on the same day if the accounts of the sender and the receiver are at the same bank.

Transfers initiated on paper must be completed with T+2 settlement at the latest.

At present, the bulk of non-urgent transfers are completed with settlement in one day.

At the same time the transfer time is reduced, data on transactions will be expanded to meet new European SEPA standards that make automatic accounting as well as switching banks easier for corporate clients.

Information on the new transfer system was published on the websites of all participants in the project on Monday.

A few months after the project was launched, in July 2010, NBH deputy governor Julia Kiraly said making the necessary changes to reduce the time for electronic transfers was expected to cost Hungarian banks HUF 7bn-8bn.