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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..