Last Updated on: 18th May 2026, 12:49 pm

Connected Banking in Tally Prime 7.0

What is Connected Banking in Tally Prime 7

Connected Banking is linking Tally Software and Bank Portal, whereby Tally user can directly perform its Internet Banking operations, without switching to Bank Portal, for convenience and secured Banking transactions.

Connected Banking feature was first incorporated in Tally Prime release 6, which has been enhanced in Tally Prime 7 release.

Integrating the Bank Account directly with Tally, enables user perform real-time banking operations, like access to account balances & statements, automated vendor payments, Bank Reconciliation, etc, from within Tally interface.

Connected Banking Overview

Connected Banking in Tally Prime – Key Features

• Bank Inside Tally: Access bank balances and statements across multiple accounts with a single, secured login through Tally.NET ID.
• Direct Online Payments: Initiate and manage secure payments (NEFT, RTGS, IMPS, or UPI) directly from the payment voucher screen.
• Real-Time Status Tracking: Monitor payment status (Successful, Pending, Failed, Authorized etc.,) without logging into Bank Portal.
• Perpetual Reconciliation: Automatically fetch bank statements and match them with books. Tally attempts to auto match corresponding entries by key reference & amount, reducing manual effort.
• Automated Payment Advice: After Payment processing, Tally automatically emails a payment advice (with UTR numbers) to the Payee.
• Audit Assurance: Provides reconciliation trail, linking book transactions and corresponding bank entries

Connected Banking – Key Features

Connected Banking in Tally Prime- Operational Steps

1. Setup and Connection

• Login: Exchange (Alt+Z) > Login. Enter Tally.NET ID and password.
• Enable Connection: Link the mobile number registered with bank. Enter the OTP received to authorize the connection.
• Connect Bank Account: Under Bank Connections, select Bank (Axis, Kotak, or SBI).
  (For SBI, enter SBI token number generated via SBI API, to link the account).
• Manage Online Payments: Press F9in the Bank Connections screen to enable online payments for the specific bank ledger.

2. Checking Live Balance

• Go to Exchange (Alt+Z) > Get Balance.
• Select bank accounts (one or multiple). Tally will fetch and display current balance instantly.

3. Processing Online Payments (Release 7.0)

• Create Voucher: Create Payment (F5) Voucher. Select the connected Bank and the Payee ledger Account.
• Bank Allocation: At Bank Allocations screen, select correct transaction type (e.g., NEFT), check Amount, vendor’s account details.
• Send Payment: Go to Exchange (Alt+Z) > Send Payments. Select the transactions and click Send.
• Authentication: Enter the OTP sent by Bank to process the payment.

4. Bank Statement and Reconciliation

• Get Bank Statement: Go to Exchange (Alt+Z) > Get Statement. Set period and click Get Statement.
• Auto-Reconcile: “Exact Matches.”  would be automatically reconciled (activating Ledger Configuration option “Automatically reconcile exact matches found”.
• Manual Entry from Statement: For transactions only in the bank (shown in blue), record through Create Voucher option instantly.

Connected Banking – Operational Steps

Connected Banking Snapshots

Enable Connected Banking

Auto Bank Reconciliation Configuration

e-payment Configuration for Bank

Security set up for connected Banking

Connected Banking in Tally Prime – Advantages

Connected Banking – Benefits, operational hurdles and suggestion for improvement – Users’ Voice

Real Benefits of Connected Banking

• Unified Interface: The primary advantage is a single, secure login via Tally.NET ID, which eliminates need to switch between Tally and multiple bank portals for daily operations.
• Real-Time Visibility: Fetch live bank balances and detailed breakups instantly while recording vouchers, without needing a fresh OTP for every balance check.
• Automated Payment Lifecycle: Initiate direct online payments (NEFT, RTGS, IMPS, or UPI) from the payment voucher screen and track their status (successful, pending, or failed), directly within TallyPrime.
• Perpetual Reconciliation: Automatically fetches bank statements and pro-actively attempts to auto-matchentries by instrument number and amount.
• Professional Vendor Communication: On successful payment, automatically emails payment advice with invoice details and UTR numbers to payees for their reference and records.
• Audit Confidence: Clear reconciliation trail, helps users and auditors, to view bank statement with links

Operational Limitations and Shortcomings

• Restricted Bank Ecosystem: Currently, full connected banking features are limited only to Axis Bank, Kotak Mahindra Bank, and SBI (current & OD Accounts only)
• Offline Data Fragility: While Tally supports statement imports for 140+ other banks, users cannot convert PDF statements to Excel, due to format incompatibility, preventing successful imports.
• Regulatory Security Barriers: To maintain bank-grade security, users generally cannot connect numerous different client accounts to a single Tally serial number, complicating workflow for auditors managing multiple clients.
• Feature Availability: Users of rel 6.0 can fetch balances but cannot initiate transactions.

Practical User Suggestions for Improvement

• Broader Bank Support: Users demand to include all major Banks. in the API partner ecosystem.
• PDF Import Capability: Users Tally should directly process PDF bank statements to eliminate the manual step of intermediary Excel/CSV files.
• Payment Scheduling: Features to schedule payments for future dates and times directly within the Tally interface, is highly desirable.
• Expanded Account Support: Inclusion of SBI Savings accounts also. Many small business use them for business purposes also.
• Enhanced Automation: Some users have suggested voice-prompted transactions, flexible GST bifurcation directly from the bank reconciliation screen.
• Simplified Multi-User Setup: Simplifying the process for multiple Tally.NET IDs or users to authorize payments for the same bank account while remaining compliant with bank protocols.

Connected Banking – Critical Questions & Answers

Q1. How to perform connected Banking.

The connection procedure may slightly differ for each Bank due to their proprietary API protocol rules. Here we give the example for SBI. For other banks, specific guidelines will apply.

Connecting State Bank of India (SBI) account with TallyPrime 7.0 allows to perform real-time banking activities such as checking balances, downloading statements, and making payments directly from the software. The integration uses API-based banking protocol on TallyPrime application and SBI portal.

Operational Steps to Connect SBI with TallyPrime 7.0

To establish a secure link, follow these detailed steps derived from the sources:

1. Initial Login and Setup

• Open TallyPrime 7.0. User must have a valid Tally Software Subscription (TSS) and an active internet connection.
• Press Alt+Z (Exchange) and select Login to enter Tally.NET ID and password.
• Enter mobile number registered with SBI; to get OTP to authorize the connection within Tally.
• Accept the terms and conditions displayed on the screen to proceed.

2. Establishing the Bank Connection

• Go to Alt+Z (Exchange) > Bank Connections.
• Select New Connection (F6) and choose State Bank of India from the list of supported banks.
• TallyPrime will generate a unique Connection ID; keep this ID ready for the SBI portal.

3. Authorisation on the SBI API Portal

• Click Connect in TallyPrime, get redirected to SBI API banking portal on web browser.
• Log in through SBI user ID and password.
• Navigate to New Application and select the option for Aggregator/ERP Provider.
• Choose TallyPrime as your ERP provider and paste the Connection ID generated in TallyPrime.
• Verify the details and click Proceed to receive an OTP for verification.

4. Token Activation and Final Sync

• After OTP verified, the portal will provide a Token Number.
• Return to TallyPrime and enter this token number when prompted.
• Set the Token Active status to ‘Yes’ and define the validity period (recommended 365 days).
• Click Refresh Status in the Bank Connections report to confirm the status changed to “Connected” / “Successful”.

Limitations and Prerequisites

• Account Types: Connected banking for SBI currently supports Current and Overdraft (OD) accounts only; Savings accounts are not yet supported for this feature.
• Profile Support: It supports Single / Multi-User profiles but does not currently support certain corporate banking structures.
• Connectivity Windows: While a token can be set for 365 days, active sessions might require periodic re-authentication or refreshing based on bank security protocols.
• PDF Restrictions: Do not convert PDF statements to Excel for manual imports, as special characters in PDFs can impact data accuracy.

Q2. How does the automated payment advice feature work in Connected Banking?

The automated payment advice feature in TallyPrime 7.0 is designed to streamline payments communication by automatically notifying payees after a payment has been successfully processed by the bank. This feature enables that Payee automatically gets all transaction details.

Working Steps

1. Configuration and Setup

To use this feature, you must first enable it within the specific bank ledger settings:

• Bank Ledger Configuration: Go to Ledger Alteration for the connected bank (e.g., Axis, Kotak, or SBI). Go to Bank Configuration Alteration > e-Payments.
• Enable Feature: Set the option “Autogenerate payment advice for connected banking” to Yes.
• Notification Settings: You can choose to “Include bill details” in the advice and specify an email address to receive a CC copy, allowing the business to keep a record of all sent notifications.

2. Vendor Master Requirements

The system pulls data from Ledger Account masters:

• Email Integration: TallyPrime automatically pulls the vendor’s email address from the Party Ledger Master.
• Bill Details: By using the “Settle Bills” option during payment, Tally captures the specific invoice numbers and amounts to include in the advice.

3. Payment  and e-mail

• Payment Initiation: Once a payment is sent via Alt+Z (Exchange) > Send Payments and authorized via OTP, Tally monitors the status.
• Message Trigger: After successful transaction, TallyPrime triggers the automated email.
• Email Delivery: Automated email sent to Payee with invoice details, amount paid, and Bank UTR (Unique Transaction Reference).

Automated Payment Advice – Features

• Automated process: No need to manually draft emails or communications on UTR numbers to Payee.
• Enhanced Relations: Payees receive instant, official confirmation. It speeds up and helps Payee to reconcile their accounts.
• Audit Transparency: Advice is linked to the bank-generated UTR and specific invoices settled in Tally, providing payment audit trail.
• Accuracy: Eliminates human errors, communication delays or omissions.

Q3 : How custom payment limits may be set up for enhanced security

In TallyPrime 7(specifically through the PrimeBanking/Connected Banking 2.0 ecosystem), custom payment limits may be optionally set up, for better financial governance and security.

These limits  aim to prevent accidental overpayments, reduce risk of fraud, and stop unauthorized bulk transactions from being processed.

• Access Bank Connections: Press Alt+Z: Exchange >All Banking Options> Bank Connections.
• Select the Bank Account: Choose the specific bank account (such as Axis, Kotak, or SBI) for which you want to define security protocols.
• Manage Online Payments: Press F9 (Manage Online Payments) within the Bank Connections screen.

Within this management screen, set two distinct types of caps directly in the software:

• Single Payment Limits: To restrict the maximum amount allowed for any individual transaction.
• Daily Total Limits: To set a cumulative cap on the total value of all payments initiated from TallyPrime, within a single day.
• Selective Accounts :  The feature may be selectively enabled for specific Bank Account.

Key Security Considerations

• Internal Governance: These limits act as an internal control layer even before the payment instruction is sent to the bank.
• Bank Portal Rules: The limits are set in TallyPrime software-level limits. However, the payment approval process and security rules defined by Bank will prevail and will apply.
• Maker-Checker System: For businesses with strict security protocols, the system supports a Maker-Checker workflow. The user (the “Maker”) initiates the payment in TallyPrime, but the transaction may still require a “Checker” to authorize or approve it on the bank portal, depending on bank’s specific API policies.
• OTP Verification: Even after limits are set, every payment sent from TallyPrime requires OTP (One-Time Password) verification, sent through linked mobile number.
• Security Enhancements : By setting these limits within the accounting software, the person recording the voucher cannot accidentally or intentionally move funds beyond the authorized threshold.

Q 4: How to make Bank Payments and send Payment advise emails. Explain the various practical problems encountered at each stage, and their resolution

Processing Bank Payments

1. Setup and Connection

• Login: Click Exchange (Alt+Z) > Login. Enter Tally.NET ID and password.
• Authorize: Enter the mobile number and provide the OTP received.
• Connect Ledger: In Bank Connections, select your bank (Axis, Kotak, or SBI). For SBI, you must enter a specific token number generated through the SBI API portal.
• Enable Payments: Press F9 in Bank Connections screen to enable online payments for the specific bank ledger.

2. Recording and Sending Payments

• Create Voucher: Record Payment (F5) voucher. Select the connected bank and the vendor ledger.
• Bank Allocation: Set the transaction type (NEFT, RTGS, IMPS, or UPI). Check vendor’s account details/IFSC.
• Authorize Transfer: Click Exchange (Alt+Z) > Send Payments. Select the transaction and click Send.
• Confirmation : Enter the OTP sent by the bank to finalize the payment instruction.

Sending Automated Payment Advice

• Configure Ledger: In Bank Ledger Alteration, select Bank Configuration Alteration > e-Payments. Set  Yes at “Autogenerate payment advice for connected banking”
• Master Data: Verify Vendor’s email address in Party Ledger Master.
• Automatic Trigger: On receiving success confirmation from Bank, the advice with invoice details and the UTR numbe is emailed to the vendor.

Practical Problems and Resolutions

In practice, several types of  problems are often encountered at various stages. The common problems and resolutions are explained.

Stage	Practical Problem Encountered	Resolution
Connection	SBI Savings Accounts are missing from the connection list.	SBI currently only supports only Current and Overdraft (OD) accounts for Connected Banking.
Authentication	Connection status shows “In Progress” or authentication is interrupted.	Click ‘Refresh Status’ button in Bank Connections or re-authenticate via the bank portal.
Data Import	Errors or data inaccuracies occur when importing statements for non-partner banks.	Do not convert PDF to Excel. Download Excel or CSV files directly from net banking to avoid special character errors.
Workflow	Payment is sent but status remains “Authorized” instead of “Successful”.	Check if your bank requires a Checker to approve the transaction on the bank portal (Maker-Checker system).
Security	Accidental high-value or unauthorized bulk transactions.	Configure Custom Payment Limits (Single and Daily) within Tally to restrict transaction amounts.
Duplication	Importing the same bank statement multiple times causes duplicate entries.	Tally has inbuilt system to track and ignore duplicates. New entries imported will show as zero if already present.

Q 5 : How to set up Maker-Checker system for Connected Bank payments

Setting up a Maker-Checker system is an essential security workflow, to ensure that no single person can both initiate and finalise a payment, effectively distributing responsibility between a “Maker” (who creates the entry) and a “Checker” (who authorises it).

Maker-Checker Workflow Functions

The Maker-Checker system is a combined workflow involving TallyPrime’s connected banking features and bank’s existing security protocols, for controlled and secured transaction.

1. Role of the Maker (In TallyPrime) : Normally “Maker” is the accountant or department head who initiates the transaction (like who writes a cheque)

• Create Payment: The Maker records the payment voucher (F5) and selects the connected bank ledger.
  • Initiate Transfer: Using Alt+Z (Exchange) > Send Payments menu, the Maker selects the transaction and clicks Send.
  • OTP Authentication: The Maker enters the OTP received to submit the payment instruction to  Bank..

2. Role of the Checker (On Bank Portal)

The transaction submitted to the bank remains in a “Pending” or “Authorized” status until approved.

The “Checker” (like authorized signatory) logs into the bank’s net banking portal and finally approves and authorises the Payment.

Tracking the Status in TallyPrime : Entire Maker-Checker workflow may be monitored through the e-Payments report in Tally Prime :

• Status Updates: TallyPrime fetches the real-time updates from Bank. The status changes  from Submitted to Authorized (after the Maker’s step) and finally to Successful (once the Checker approves it on the portal).
• Refreshed Visibility: Click Get Online Payment Status button to see if the Checker has authorized the transaction.

Advantages of Maker-Checker Integration : It provides :

• Internal Governance: Digital safety layer to prevent unauthorized or accidental bulk transactions.
• Real-time Trail: Clear audit trail from transaction initiation to the final confirmation.
• Unified Monitoring: Eliminates the need for the accounts team to log into multiple bank portals to check the status of the payments.

Q6 : How multiple Tally users may authorize payments for same bank

Multiple usershaving necessary permissions and unique Tally.NET credentials may participate in the authorization and payment process for the same bank in TallyPrime. The system supports multi-users by linking specific user IDs to banking permissions while adhering to the bank’s own security protocols.

Multi-User Authorization Process

• Tally.NET ID Access: Both administrators (admin) and non-admin users can access Connected Banking features. However, a non-admin user requires explicit approval from the admin to use these services.
• Unique Credentials: Different users can log in with their own Tally.NET IDs to perform banking tasks. Mobile numbers registered with the bank, may be assigned to a specific user, allowing them to fetch balances, view statements, or initiate payments through their unique login.
• The Maker-Checker Workflow: In many business setups, one user acts as the “Maker” (initiating the payment in TallyPrime), while another user or an authorized signatory acts as the “Checker“ (authorizing the transaction).
• OTP-Based Security: Regardless of how many users are involved, the final authorization often relies on OTP validation by Bank. The person who receives this OTP is considered the “de facto” authorized person for that transaction.

Q 7: How to automate bank reconciliations for non-partner bank accounts

Bank reconciliations for non-partner bank accounts may be automated using the Offline Bank Statement Import feature. TallyPrime provides preconfigured the statement formats for most of the major Indian banks.

Automated Reconciliation process for Non-Partner Banks : Tally does not “fetch” the statement directly from a non-partner bank’s server. The reconciliation process may be automated on importing Bank Statement file, through following steps :

• Download Statement: Log into bank’s net banking portal and download your bank statement in Excel or CSV format.
• Import to Tally: In Tally, click Import > Bank Statement, select the file. Tally would recognize the bank’s format automatically.
• Exact Matching logic: TallyPrime will attempt Exact Matches” between bank statement and  accounts records based on the instrument number and amount.

Operational Steps for Setup

To following configuration steps would help to optimise the matching process :

Enable Auto-Reconcile: At Bank Ledger (Alter Master > Ledger), at  bank reconciliation configuration, set   Yes at “Automatically reconcile exact matches found”. To ImportBank Statemen, Click Alt+O (Import) > Bank Statement, Select the bank and the file path. Preview the entries and click Import.

Reconciling Unmatched Entries: External bank entry not yet in your books are shown in Blue. Vouchers may be created through Create Voucher button, to reconcile these entries.

Limitations and Precautions

• PDFs : Do not convert PDF statements to Excel or CSV. Conversion often introduces special characters and formatting errors. Always download the original Excel/CSV file directly from the bank portal.
• Formats: Tally recognises specific columns of each bank. Files modified by third-party converter may not work.

Live balances or direct payments can not be initiated from TallyPrime for non-partner accounts, without  direct API connection.