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E-Payment Products based on
Centralised RBI PlatformsBy :
Kaza Sudhakar
General Manager
Department of Payment and Settlement SystemsReserve Bank of India
Bank Card & ePayment
2005
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Constraints Issues
Geographical spread Delays in receiving credits
Low levels of banking automation Uncertainty of payments
Inadequate communication Reconciliation issues
Gaps in postal infrastructure High fraud potential
Administrative Burden
Banking Infrastructure of India
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Payments Systems Vision
Objective : To Provide A Safe, Secure,Sound and Efficient payment andsettlement system for the country
Increase Efficiency of the Paymentssystems
Customer Facilitation for each of thepayment system products
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Payment System Developments
Initiatives driven by the Reserve Bank of India Increase in the number of centers offering MICR clearing
Introduction of High Value Clearing at additional centers
Electronic Clearing Services - debits and credits
Electronic Funds Transfers and Special Electronics funds transfer
Real Time Gross Settlement System (RTGS)
Cheque Truncation
NEFT
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Payment System ..RBI Vision
Banks to focus on:
Senior Management Involvement
Creating awareness amongst customers Create Inter-bank products Electronic Delivery Channels- ATMs, Kiosks, Website, etc., Reasonable Pricing
STP to drive down costs Solutions tailored to customers needs
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The Road Blocks
Attitude It is something new.. We are comfortable with
the existing order. Failure to think ahead The difficulty in marketing new products.
The resistance from vested interests and thoseinterested in the existing order.
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Benefits of RTGS
Real-time Payment Settlement: Payments settled in real time on atransaction-by-transaction basis, as soon as they are accepted bythe system.
No Credit Risk :- There is no credit and settlement risk involved in
RTGS system for receiving participant as each payment transactionis settled instantly.
Predictability of Cash Flows:- RTGS facilitates predictability of cashflows as customers know when their accounts will be debited orcredited.
Benefits to Economy : The instant finality of payments ensures fast,secure and irrevocable settlement of major business and financialmarket transactions
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Issues relating to growth in RTGS
Awareness..-Create independent counter at branches..-Create user friendly delivery channels and offer dedicated
products through.>a robust website
>a kiosk>an ATM>or menu driven user friendly interface at the banks
branches.
Charges..-Some of the banks have reduced chargessubstantially..Rs.25 to Rs.50 per transaction
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RTGS .. Coverage
11300 Branches of 95 Bankscovering 508 Clearing Centres. Nearly800 cities/towns covered.
79 Banks offering Customer Transactions Delivery Channels to reach the different categories
-- Website-- ATMs-- Kiosks RTGS should be extended to all the CBS / AWB branches. Customers desire RTGS facility at an affordable price.
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EFT and SEFTnet settlement system
Electronic Funds Transfer (EFT) andSpecial Electronic Funds Transfer (SEFT)facilitate paperless inter and intra-bank
settlements; both inter and intra-city. There is no Maximum value limit for anindividual SEFT/ EFT transaction.
EFT is available at 15 locations: Mumbai,Kolkata, New Delhi, Chennai, Bangalore,Hyderabad, Ahmedabad, Chandigarh,Trivandrum, Jaipur, Nagpur, Guwahati,
Bhubhaneshwar, Patna and Kanpur.
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EFT and SEFT
SEFT participation is voluntary and participating bankshave discretion to define branches that can participate in
SEFT
SEFT covers approximately 3200 networked branches of
35 banks in over 180 cities (currently). Two Settlements every day from November 2, 2005 10.30am3.00 pm Working Group on EFT for Capital Markets
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Some EFT Products
EFT for crediting Merchant Establishments of Credit Cards, Point of Sale,Smart Cards.
Corporates crediting Suppliers through EFT. Railways and Defense Supplierscredits.
Routing Foreign credits to beneficiaries in India.
Cash Management Product Beneficiaries Credits.
EFT interface on internet allows customers freedom to credit beneficiaries inother banks without visiting their bank
Banks having EDI interface with Govt. Departments say for exampleCustoms, can credit payments like duty drawback etc., into accounts ofother banks instead of giving pay orders.
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Some EFT Products
The Govt. Departments can also be creditedthrough EFT from various banks.
Some Government Bodies like DGFT receivelicense fees from lakhs of exporters, which canbe done through EFT.
The analogy can be extended to pvt. Companieswhich receive payments from lakhs ofdealers/franchisees.
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Local ECS
Available at the 44 Clearing Centre. (15 RBI Centres, 23 SBI Centres, 2 PNB, 1
Union Bank, 1 Corp Bank, 1 Andhra Bank
and 1 SB of Indore) Funds transfer on T+2 basis..Available for Credit as well as Debit.
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How ECS Works - Process f low
User InstitutionBeneficiaries
A/Cs
Destination banksservice branches
Destination
branches
Clearing
House
Sponsor Bank
Data on Day-
1
Reports on Day-1
Reports on Day-1
Credit on Day-2
Encrypted
Da
taon
Day-1
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ECS - Processing of Uncredited Payment
Instructions contd...
User Institution
Destination banks
service branches
Destination
branches
Clearing
HouseSponsor Bank
Encrypted Output Data on
Post Settlement
Day-1
Return Data submitted on
Post Settlement
Day-1
Return Advice on Post Settlement Day-1
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Centralised ECS
Available at 15 centres.. Submit data file at one location and get
credit across 15 locations..
Funds transfer on T+2 basis..
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Banking Products based on ECS
ECS Credit Corporate users credit Dividend, Interest and other types
of warrants.
RBI uses ECS credit for crediting RBI bonds interest tothe bond holders. Most Corporates and Govt. Departments use ECS credit
for Salary credit
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Banking ProductsECS Credit..
Monthly payments to Suppliers etc., Merchant Establishments for Credit Cards,
Smart Cards and Point of Sale debit cards. Pension Payments of big Govt. Depts. like
Defence, Railways etc.,
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Banking Products for ECS Debit
Credit Card payments Utilities payments .. Telephone, Cell phones,
Electricity bills Equated Monthly Instalment payments ofpersonal loans
School fees
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Banking Products for ECS
Credibility issues in ECS debit solved byinternet. The customer first validates the
bill through Internet and thereafter theUser releases the ECS Debit
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What Corporates ShouldDo????
Analyse the payments and receipt stream Identify the payments for each type of product.
(RTGS, SEFT, ECS and EFT)
Put a mechanism in place for receipts andpayments.
Demand the Required Products from
your Bank !!!
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Thank You..