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Back Office OperationsBack Office Operations Clearing Operations,Clearing Operations,

Payment & SettlementPayment & SettlementSystemsSystems

SUDHEENDRAN.MSUDHEENDRAN.M

SCMSSCMS -- COCHINCOCHIN

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PAYMENT & SETTLEMENTPAYMENT & SETTLEMENT

SYSTEMSYSTEM

RBIRBI Key role in Efficient National Payment SystemKey role in Efficient National Payment System

Payment System : Transfer of value between payerPayment System : Transfer of value between payer

& payee& payee

22--way flow of fundsway flow of funds

Components : Instruments, Institutions, LegalComponents : Instruments, Institutions, Legalsystemsystem

Users : Individuals, banks, companies, Govt.Users : Individuals, banks, companies, Govt.

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WAYS OF MAKING PAYMENTSWAYS OF MAKING PAYMENTS

CashCash

ChequeCheque

DDDD Credit cardsCredit cards

Debit cardsDebit cards

Electronic instructions to the banker whoElectronic instructions to the banker whowill make such a payment on behalf of hiswill make such a payment on behalf of his

customers.customers.

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ELECTRONIC PAYMENTELECTRONIC PAYMENT

SYSTEMSYSTEM

CHEQUE TRUNCATIONCHEQUE TRUNCATION

ATMsATMs

CARDSCARDS ECSECS

EFTEFT

RTGS & NEFTRTGS & NEFT INTERNET BANKINGINTERNET BANKING

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ELECTRONIC PAYMENTELECTRONIC PAYMENT

SYSTEMSYSTEM

Cheque Truncation :Cheque Truncation :

The process of stopping the flow of theThe process of stopping the flow of the

physical chequephysical cheque

Electronic image of the cheque to the draweeElectronic image of the cheque to the draweebranchbranch

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ATMATM

Mid 1970sMid 1970s USA & JapanUSA & Japan

No. of ATMsNo. of ATMs Approx. 10 lakhsApprox. 10 lakhs

ManufacturersManufacturers NCR,Wincor Nixdort, DieboldNCR,Wincor Nixdort, Diebold

IndiaIndia 19871987 HSBCHSBC

Rate of growthRate of growth Highest in IndiaHighest in India

IndiaIndia Around 60000 ATMsAround 60000 ATMs

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ATMBanking Beyond BankingATMBanking Beyond Banking

HoursHours

A device to receive and dispense cashA device to receive and dispense cash

round the clock.round the clock.

Facilities ? Cash & NonFacilities ? Cash & Non-- cashcash

ATM Card & PINATM Card & PIN-- MustMust

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Types of ATMsTypes of ATMs

Exterior & InteriorExterior & Interior

Online & OfflineOnline & Offline

ATMs with Currency converterATMs with Currency converter

Interactive & Voice RecognizerInteractive & Voice Recognizer

Security AidsSecurity Aids

Access Locks, Surveillance & RecordingAccess Locks, Surveillance & RecordingSystemsSystems

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Advantages of ATMsAdvantages of ATMs -- CustomersCustomers

24/7, 7 & 365

Quick & Efficient service.

Privacy Error free

Anywhere

Flexibility in withdrawals Fund transfer branches/banks

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Advantages of ATMsAdvantages of ATMs -- BanksBanks

Alternative to extendAlternative to extendbanking hoursbanking hours

Less no of customers inLess no of customers in

branchesbranches

Cheaper service & LowerCheaper service & Loweroperating expsoperating exps

Alternative to new branchesAlternative to new branches

Less cash handlingLess cash handling Less RiskLess Risk

Anywhere ServiceAnywhere Service

More analytical andMore analytical andinnovative workinnovative work

Increased marketIncreased marketpotentialpotential

Any Disadvantage?Any Disadvantage?

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Electro Magnetic CardsElectro Magnetic Cards

Cashless TransactionsCashless Transactions

Main PlayersMain Players -- Visa, MasterCard, Amex.Visa, MasterCard, Amex.

IndiaIndia Small ValueSmall Value

Personal transactionsPersonal transactions

Credit Card/Debit CardCredit Card/Debit Card

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Credit CardsCredit Cards

Specimen signature panel on the reverseSpecimen signature panel on the reverse

Credit Period & Credit Limit to customerCredit Period & Credit Limit to customer

Cash withdrawalCash withdrawal ExpensiveExpensive

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Debit CardsDebit Cards

Immediate debit to the a/c of customerImmediate debit to the a/c of customer

Debit Vs Credit Card?Debit Vs Credit Card?

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Credit CardCredit Card Offers to CustomersOffers to Customers

Deferred Payment OptionDeferred Payment Option

DiscountDiscount

Bonus PointsBonus Points

Waiver of surchargeWaiver of surcharge Petrol pumpsPetrol pumps

Insurance CoverInsurance Cover

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Advantages of Credit CardsAdvantages of Credit Cards

To CardholdersTo Cardholders

To MEsTo MEs

To BanksTo Banks

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ECS

Saraf CommitteeSaraf Committee

RBIRBI Aug 1994Aug 1994

Bulk Payments/ ReceiptsBulk Payments/ Receipts

Small valueSmall value To individual accountsTo individual accounts

Eg : Dividend, SIP, Bill paymentsEg : Dividend, SIP, Bill payments

Sponsor Bank RBI Different BanksSponsor Bank RBI Different Banks

ECS Credit (No limit)ECS Credit (No limit)

ECS Debit (Mandate, Validity Period, Upper Limit)ECS Debit (Mandate, Validity Period, Upper Limit)

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EFTEFT

Saraf CommitteeSaraf Committee

Fund Traansfer between a/csFund Traansfer between a/cs

RBI Centres onlyRBI Centres only

Remitting Branch, Service Branch, Local RBI,Remitting Branch, Service Branch, Local RBI,

INFINET, RBI at the Receiving centre, ReceivingINFINET, RBI at the Receiving centre, Receiving

bankbank

No limitNo limit No service charge by RBI.No service charge by RBI.

Now?Now?

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RTGS & NEFT

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INTERNET BANKING

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THANK YOUTHANK YOU