This document discusses e-payment products based on centralized platforms run by the Reserve Bank of India. It notes constraints of the existing banking infrastructure and outlines the vision to provide a safe, efficient payment system. It describes various payment system developments and initiatives by RBI to increase efficiency. These include expanding cheque clearing, introducing high value clearing, and electronic funds transfer systems like NEFT. The document also discusses roadblocks to adoption, benefits of the real-time gross settlement system, and expanding coverage of payment platforms to more banks and customers.

1. E-Payment Products basedE-Payment Products based
on Centralised RBI Platformson Centralised RBI Platforms
By :By :
Kaza SudhakarKaza Sudhakar
General ManagerGeneral Manager
Department of Payment and Settlement SystemsDepartment of Payment and Settlement Systems
Reserve Bank of IndiaReserve Bank of India
Bank Card & ePayment
2005

2. 2
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 IndiaBanking Infrastructure of India

3. 3
Payments System’s VisionPayments System’s Vision
• Objective : “To Provide A Safe, Secure,Objective : “To Provide A Safe, Secure,
Sound and Efficient payment andSound and Efficient payment and
settlement system for the country”settlement system for the country”
• Increase Efficiency of the PaymentsIncrease Efficiency of the Payments
systemssystems
• Customer Facilitation for each of theCustomer Facilitation for each of the
payment system productspayment system products

4. 4
Payment System DevelopmentsPayment System Developments
• Initiatives driven by the Reserve Bank of IndiaInitiatives driven by the Reserve Bank of India
– Increase in the number of centers offering MICR clearingIncrease in the number of centers offering MICR clearing
– Introduction of High Value Clearing at additional centersIntroduction of High Value Clearing at additional centers
– Electronic Clearing Services - debits and creditsElectronic Clearing Services - debits and credits
– Electronic Funds Transfers and Special Electronics funds transferElectronic Funds Transfers and Special Electronics funds transfer
– Real Time Gross Settlement System (RTGS)Real Time Gross Settlement System (RTGS)
– Cheque TruncationCheque Truncation
– NEFTNEFT

5. 5
Payment System ..RBIPayment System ..RBI
VisionVision
Banks to focus on:Banks to focus on:
• Senior Management InvolvementSenior Management Involvement
• Creating awareness amongst customersCreating awareness amongst customers
• Create Inter-bank productsCreate Inter-bank products
• Electronic Delivery Channels- ATMs, Kiosks, Website,Electronic Delivery Channels- ATMs, Kiosks, Website,
etc.,etc.,
• Reasonable PricingReasonable Pricing
• STP to drive down costsSTP to drive down costs
• Solutions tailored to customers needsSolutions tailored to customers needs

6. 6
The Road BlocksThe Road Blocks
• AttitudeAttitude
• It is something new.. We are comfortable withIt is something new.. We are comfortable with
the existing order.the existing order.
• Failure to think ahead…Failure to think ahead…
• The difficulty in marketing new products.The difficulty in marketing new products.
• The resistance from vested interests and thoseThe resistance from vested interests and those
interested in the existing order.interested in the existing order.

7. 7
Benefits of RTGSBenefits of RTGS
• Real-time Payment Settlement: Payments settled in real time on aReal-time Payment Settlement: Payments settled in real time on a
transaction-by-transaction basis, as soon as they are accepted bytransaction-by-transaction basis, as soon as they are accepted by
the system.the system.
• No Credit Risk :- There is no credit and settlement risk involved inNo Credit Risk :- There is no credit and settlement risk involved in
RTGS system for receiving participant as each payment transactionRTGS system for receiving participant as each payment transaction
is settled instantly.is settled instantly.
• Predictability of Cash Flows:- RTGS facilitates predictability of cashPredictability of Cash Flows:- RTGS facilitates predictability of cash
flows as customers know when their accounts will be debited orflows as customers know when their accounts will be debited or
credited.credited.
• Benefits to Economy : The instant finality of payments ensures fast,Benefits to Economy : The instant finality of payments ensures fast,
secure and irrevocable settlement of major business and financialsecure and irrevocable settlement of major business and financial
market transactionsmarket transactions

8. 8
Issues relating to growth in RTGS…Issues relating to growth in RTGS…
• Awareness..Awareness..
-Create independent counter at branches..-Create independent counter at branches..
-Create user friendly delivery channels and offer dedicated-Create user friendly delivery channels and offer dedicated
products through….products through….
>a robust website>a robust website
>a kiosk>a kiosk
>an ATM>an ATM
>or menu driven user friendly interface at the banks>or menu driven user friendly interface at the banks
branches.branches.
• Charges..Charges..
-Some of the banks have reduced charges-Some of the banks have reduced charges
substantially..Rs.25 to Rs.50 per transactionsubstantially..Rs.25 to Rs.50 per transaction

9. 9
RTGS .. CoverageRTGS .. Coverage
• 11300 Branches of 95 Banks…covering 508 Clearing Centres.11300 Branches of 95 Banks…covering 508 Clearing Centres.
Nearly 800 cities/towns covered.Nearly 800 cities/towns covered.
• 79 Banks offering Customer Transactions79 Banks offering Customer Transactions
• Delivery Channels to reach the different categories…Delivery Channels to reach the different categories…
-- Website-- Website
-- ATMs-- ATMs
-- Kiosks-- Kiosks
• RTGS should be extended to all the CBS / AWB branches.RTGS should be extended to all the CBS / AWB branches.
• Customers desire RTGS facility at an affordable price.Customers desire RTGS facility at an affordable price.

10. 10
EFT and SEFTEFT and SEFT
…net settlement system…net settlement system
• Electronic Funds Transfer (EFT) andElectronic Funds Transfer (EFT) and
Special Electronic Funds Transfer (SEFT)Special Electronic Funds Transfer (SEFT)
facilitate paperless inter and intra-bankfacilitate paperless inter and intra-bank
settlements; both inter and intra-city.settlements; both inter and intra-city.
• There is no Maximum value limit for anThere is no Maximum value limit for an
individual SEFT/ EFT transaction.individual SEFT/ EFT transaction.
• EFT is available at 15 locations: Mumbai,EFT is available at 15 locations: Mumbai,
Kolkata, New Delhi, Chennai, Bangalore,Kolkata, New Delhi, Chennai, Bangalore,
Hyderabad, Ahmedabad, Chandigarh,Hyderabad, Ahmedabad, Chandigarh,
Trivandrum, Jaipur, Nagpur, Guwahati,Trivandrum, Jaipur, Nagpur, Guwahati,
Bhubhaneshwar, Patna and KanpurBhubhaneshwar, Patna and Kanpur..

11. 11
EFT and SEFTEFT and SEFT
• SEFT participation is voluntary and participating banksSEFT participation is voluntary and participating banks
have discretion to define branches that can participate inhave discretion to define branches that can participate in
SEFTSEFT
• SEFT covers approximately 3200 networked branches ofSEFT covers approximately 3200 networked branches of
35 banks in over 180 cities (currently).35 banks in over 180 cities (currently).
• Two Settlements every day from November 2, 2005Two Settlements every day from November 2, 2005
• 10.30am – 3.00 pm10.30am – 3.00 pm
• Working Group on EFT for Capital MarketsWorking Group on EFT for Capital Markets

12. 12
Some EFTSome EFT
ProductsProducts
• EFT for crediting Merchant Establishments of Credit Cards, Point of Sale,EFT for crediting Merchant Establishments of Credit Cards, Point of Sale,
Smart Cards.Smart Cards.
• Corporates crediting Suppliers through EFT. Railways and DefenseCorporates crediting Suppliers through EFT. Railways and Defense
Suppliers credits.Suppliers credits.
• Routing Foreign credits to beneficiaries in India.Routing Foreign credits to beneficiaries in India.
• Cash Management Product Beneficiaries Credits.Cash Management Product Beneficiaries Credits.
• EFT interface on internet allows customers freedom to credit beneficiaries inEFT interface on internet allows customers freedom to credit beneficiaries in
other banks without visiting their bankother banks without visiting their bank
• Banks having EDI interface with Govt. Departments say for exampleBanks having EDI interface with Govt. Departments say for example
Customs, can credit payments like duty drawback etc., into accounts ofCustoms, can credit payments like duty drawback etc., into accounts of
other banks instead of giving pay orders.other banks instead of giving pay orders.

13. 13
Some EFT ProductsSome EFT Products
• The Govt. Departments can also be creditedThe Govt. Departments can also be credited
through EFT from various banks.through EFT from various banks.
• Some Government Bodies like DGFT receiveSome Government Bodies like DGFT receive
license fees from lakhs of exporters, which canlicense fees from lakhs of exporters, which can
be done through EFT.be done through EFT.
• The analogy can be extended to pvt. CompaniesThe analogy can be extended to pvt. Companies
which receive payments from lakhs ofwhich receive payments from lakhs of
dealers/franchisees.dealers/franchisees.

14. 14
Local ECS…Local ECS…
• Available at the 44 Clearing Centre.Available at the 44 Clearing Centre.
• (15 RBI Centres, 23 SBI Centres, 2 PNB,(15 RBI Centres, 23 SBI Centres, 2 PNB,
1 Union Bank, 1 Corp Bank, 1 Andhra1 Union Bank, 1 Corp Bank, 1 Andhra
Bank and 1 SB of Indore)Bank and 1 SB of Indore)
• Funds transfer on T+2 basis..Funds transfer on T+2 basis..
• Available for Credit as well as Debit.Available for Credit as well as Debit.

15. 15 11
How ECS Works - Process flowHow ECS Works - Process flow
User Institution
Beneficiaries’
A/Cs
Destination banks’
service branches
Destination
branches
Clearing
House
Sponsor Bank
Data on Day-
1
Reports on Day-1
Reports on Day-1
Credit on Day-2
Encrypted
DataonDay-1

16. 16
ECS - Processing of Uncredited PaymentECS - Processing of Uncredited Payment
Instructions contd...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
EncryptedOutput
Dataon
PostSettlement
Day-2

17. 17
Centralised ECS…Centralised ECS…
• Available at 15 centres..Available at 15 centres..
• Submit data file at one location and getSubmit data file at one location and get
credit across 15 locations..credit across 15 locations..
• Funds transfer on T+2 basis..Funds transfer on T+2 basis..

18. 18
Banking Products based on ECSBanking Products based on ECS
• ECS CreditECS Credit
• Corporate users credit Dividend, Interest and other typesCorporate users credit Dividend, Interest and other types
of warrants.of warrants.
• RBI uses ECS credit for crediting RBI bonds interest toRBI uses ECS credit for crediting RBI bonds interest to
the bond holders.the bond holders.
• Most Corporates and Govt. Departments use ECS creditMost Corporates and Govt. Departments use ECS credit
for Salary creditfor Salary credit

19. 19
Banking Products – ECS Credit..Banking Products – ECS Credit..
• Monthly payments to Suppliers etc.,Monthly payments to Suppliers etc.,
• Merchant Establishments for Credit Cards,Merchant Establishments for Credit Cards,
Smart Cards and Point of Sale debitSmart Cards and Point of Sale debit
cards.cards.
• Pension Payments of big Govt. Depts. likePension Payments of big Govt. Depts. like
Defence, Railways etc.,Defence, Railways etc.,

20. 20
Banking Products for ECSBanking Products for ECS
DebitDebit
• Credit Card paymentsCredit Card payments
• Utilities payments .. Telephone, Cell phones,Utilities payments .. Telephone, Cell phones,
Electricity billsElectricity bills
• Equated Monthly Instalment payments ofEquated Monthly Instalment payments of
personal loanspersonal loans
• School feesSchool fees

21. 21
Banking Products for ECSBanking Products for ECS
Credibility issues in ECS debit solved byCredibility issues in ECS debit solved by
internet. The customer first validates theinternet. The customer first validates the
bill through Internet and thereafter thebill through Internet and thereafter the
User releases the ECS DebitUser releases the ECS Debit

22. 22
What Corporates ShouldWhat Corporates Should
Do…????Do…????
• Analyse the payments and receipt streamAnalyse the payments and receipt stream
• Identify the payments for each type of product.Identify the payments for each type of product.
(RTGS, SEFT, ECS and EFT)(RTGS, SEFT, ECS and EFT)
• Put a mechanism in place for receipts andPut a mechanism in place for receipts and
payments.payments.
• Demand the Required Products fromDemand the Required Products from
your Bank !!!your Bank !!!

23. 23
Thank You..Thank You..