RBI initiate payment and settlement infrastructure through technological tools
In it’s bid for ensuring smooth operations and proper conduct of the payment systems the Reserve Bank of India (RBI) has issued a Vision Document from the aspect of - safety, security, soundness and efficiency with accessibility and authority of the payment systems carries critical importance. The vision document is a guide book about the payments and settlement system-related activities of RBI.
In the vision document, RBI has highlighted the scope of achieving the robust payment and settlement infrastructure through technological tools. Prepaid Instruments, Voice, Internet and Mobile payment systems and dynamic online presence are some of the technical skills which are acknowledged in the vision document.
Internet and Mobile Association of India (IAMAI) has welcomed this initiative of RBI. In an official statement issued after release of this vision document of RBI, IAMAI have expressed positive hopes of achieving systematic stability of the existing financial system. Dr Subho Ray, President IAMAI stated, “Smooth functioning of payment systems becomes vital in the light of inter-linkages they have with other financial systems. In today’s context, mobile technology clubbed with robust online presence could contribute significantly in this direction.”
According to the newly introduced vision statement, outreach of existing payment system products should be enhanced geographically and more segments of the populace in the country shall continue to be focused upon.
RBI will continue to play an important role in introducing customer service initiatives. Towards this direction, the recent steps taken in various payment system segments include - card payments (increasing card security), ATM payments (increasing accessibility to the public, bringing transparency and reasonableness in charges), rationalising charges for electronic payments (NEFT / RTGS) and collection of outstation cheques, mobile payments (issuance of ‘Mobile Banking transactions in India - Operative Guidelines for Banks’), pre-paid payment instruments and so on.
As far as technology capabilities are concerned, Dr Ray also added, “We are very hopeful with this vision of RBI, specially with their planning for roll outs of newer services. The India Card initiative which is discussed in the vision document has a lot of potential for the common users with regards to carry out financial transactions flawlessly. We see such initiatives from an esteemed financial organization like RBI as really a moral booster for mobile technology stakeholders and users.”
The document also mentions about various studies that would be undertaken by the RBI to mention some of them are:
* Impact of rationalisation of charges on the use of various payment systems
* Growth in use of prepaid payment instruments consequent upon issuance of guidelines and authorisation of various entities to issues such instruments
* Increased usage of cards for making payments and corresponding decline in use of cash for retail transactions.
Dr. Ray added that IAMAI with its Payments Committee would work to provide necessary support and information for such studies.
The vision statement also highlighted the glimpse of major projects for achieving the systematic stability that are intended to be pursued are:
* Implementing a new and feature rich RTGS system - The need to migrate to a new version of RTGS that could leverage on advancements in technology, provide for scalability in volumes, parameterise more features in line with similar facilities available in other countries, result in more flexibility in operations, better liquidity saving features, etc., would be pursued.
* India MoneyLine - A 24×7 system for one-to-one funds transfers - The existing NEFT system operates during weekdays from 9 am to 5 pm and on Saturdays from 9 am to 12 noon. The Bank would pursue the suggestion to consider the need to extend NEFT to function on a 24×7 basis or to develop a new system akin to the Faster Payments Service in the UK which operates on a 24×7 basis.
* India Card - A domestic card initiative -The concept of a domestic payment card (India Card) and a PoS switch network for issuance and acceptance of payment cards would be looked into. The need for such a system arises from two major considerations. The first is the high cost borne by the Indian banks for affiliation with international card associations in the absence of a domestic price setter. The second is connection with international card associations resulting in the need for routing even domestic transactions, which account for more than 90% of the total, through a switch located outside the country.
* Redesigning ECS to function as a true Automated Clearing House (ACH) for bulk transactions - Currently, Local ECS (to facilitate bulk electronic transactions with one-to-many and many-to-one variants) is operational at 76 centres. Centralisation of this process is already underway with the launch of credit variant of NECS at Mumbai (and RECS on a pilot basis). The debit variant is also being planned for implementation. The ECS / NECS solution is internally developed and has been in use since long and the need for building a technology and feature-rich ACH network by totally redesigning the existing ECS to provide end-to-end processing in a straight-through manner would be examined.
* Mobile payments settlement network - Mobile phones are expected to emerge as an important channel for transmission of payment instructions. Efficient mobile payments would require real time transfer of funds with adequate security. Currently all inter-bank mobile transfers are payment instructions for settling funds through existing payment systems. This would require building a national infrastructure for facilitating real time mobile payments.
* These initiatives would be taken forward in co-ordination with the NPCI.