This document provides an overview of global and Indian payment and transaction processing systems. It discusses the global regulatory framework established by the Bank for International Settlements and the regulatory framework in India established by the Reserve Bank of India. It describes how banks transact with each other using real-time gross settlement systems like RTGS and net settlement systems like NEFT. It also outlines how customers transact through conventional and electronic modes like mobile banking. Specialized companies operating in various areas of the industry are discussed as well as the market share and critical success factors of different payment modes. Risks to payment systems are also addressed.

1. Payments & Transaction Processing SystemsGlobal and Indian Overview

2. AGENDAIntroductionGlobal regulatory frameworkRegulatory framework in IndiaHow banks transact?How customers transact?Specialized companies operating in each areaMarket shareCritical success factorsRisks

3. AGENDAIntroductionGlobal regulatory frameworkRegulatory framework in IndiaHow banks transact?How customers transact?Specialized companies operating in each areaMarket shareCritical success factorsRisks

4. INTRODUCTIONPayment Systems: A configuration of institutions supported by a technology infrastructure and driven by processes to facilitate financial transfers between payer and beneficiaryBank BBank AMessaging and Routing PlatformSecurities Clearing & SettlementLarge Value Clearing & SettlementRetail Clearing & Settlement

5. AGENDAIntroductionGlobal regulatory frameworkRegulatory framework in IndiaHow banks transact?How customers transact?Specialized companies operating in each areaMarket shareCritical success factorsRisks

6. BIS-CPSS – Standards set by PSDG via World BankSource: World Bank

7. Global Regulatory FrameworkPayment, Remittances & Securities settlement systems represent a basic infrastructure for the functioning of market economiesSound PRSS are Essential for Financial System Stability & Development

8. Large value payments in a year - more than 50 times global GDP

9. Growth in total amounts settled by RTGS - 86% between 2002 and 2006 and 82% of the value of total payments

10. Safe PRSS Mitigate Risks in Financial Markets

11. Financial market crises reflect first in payment systems

12. Interbank money market relies heavily on ability to transmit funds

13. Efficient PRSS Lead Countries to Huge Savings

14. Progressive shift from paper-based to electronic payments can produce a potential saving to the country of 0.7% of the GDP per year

15. PRSS are Key in Developing More Inclusive Financial Systems

16. Enhances access to financial services

17. Retail payments services first entry point of underserved into financial sectorSource: World Bank

18. AGENDAIntroductionGlobal regulatory frameworkRegulatory framework in IndiaHow banks transact?How customers transact?Specialized companies operating in each areaMarket shareCritical success factorsRisks

19. Regulatory Framework in IndiaRegulatory Acts & Provisions:The Payment and Settlement Systems Act, 2007 – (PSS)

20. Board for Regulation and Supervision of Payments and Settlement Systems Regulations, 2008

21. Payment and Settlement Systems Regulations, 2008 The PSS Act stipulates that no person other than the Reserve Bank of India shall commence or operate a payment system, except under and in accordance with an authorisation issued by the Reserve Bank of India as per the provisions of the PSS ActRBI is empowered to prescribe:Format of payment instructions

22. Size and shape of instructions

23. Timings to be maintained by payment systems

24. Manner of funds transfer

25. Criteria for membership Source: Reserve Bank of India

26. AGENDAIntroductionGlobal regulatory frameworkRegulatory framework in IndiaHow banks transact?How customers transact?Specialized companies operating in each areaMarket shareCritical success factorsRisks

27. How Banks Transact and Settle with Each other? Interbank funds transfer systems are arrangements through which funds transfers are made between banks for their own account or on behalf of their customers Different systems for different purposes:Fund transfer systems for Large Value transactions

28. Fund transfer systems for Large Volume of low value payments Key elements of fund transfers:Transfer of messages (information) between the banks

29. Settlement – Actual transfer of funds between the payer’s bank and payee’s bankRTGS / NEFT Gross Settlement System

30. Processing and final settlement can take place continuously