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Payment Systems

The Reserve Bank of India's vision is to encourage electronic payment systems and ensure safe, efficient, interoperable and compliant payment systems. Electronic payment systems like NEFT and RTGS allow fund transfers between banks, with NEFT operating on a deferred net settlement basis in batches and RTGS processing transactions continuously during business hours. SWIFT provides a secure, standardized network that enables financial institutions worldwide to exchange information about transactions, though it does not facilitate funds transfers directly.

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248 views7 pages

Payment Systems

The Reserve Bank of India's vision is to encourage electronic payment systems and ensure safe, efficient, interoperable and compliant payment systems. Electronic payment systems like NEFT and RTGS allow fund transfers between banks, with NEFT operating on a deferred net settlement basis in batches and RTGS processing transactions continuously during business hours. SWIFT provides a secure, standardized network that enables financial institutions worldwide to exchange information about transactions, though it does not facilitate funds transfers directly.

Uploaded by

Ganesh Shankar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Payment Systems

Simplistic definition the way we make and receive payments using different payment instruments.

RBI Vision : To proactively encourage electronic payment systems for ushering in a less-cash society in India and to ensure payment and settlement systems in the country are safe, efficient, interoperable, authorised, accessible, inclusive and compliant with international standards.

Evolution of Payment Systems


Natural Money ( Premature Time )

Precious Metal Money (650 BC) Paper money ( 1700 AD ) Symbolic Money ( Present ) Digital Money (Future)

Electronic Payment Systems


National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) allow individuals, companies and firms to transfer funds from one bank to another.

How are the two different? NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place with all transactions received till a particular cutoff time. It operates in hourly batches there are 11 settlements from 9 am to 7 pm on weekdays and five between 9 am and 1 pm on Saturdays. Any transaction initiated after the designated time would have to wait till the next settlement time. In RTGS, transactions are processed continuously, all through the business hours. RBIs settlement time is 9 am to 4:30 pm on weekdays and 9 am to 1:30 pm on Saturdays. Banks can function within this time frame or change it. Here, transfers made are quick and can be helpful in emergencies.

S.W.I.F.T - Society for Worldwide Interbank Financial Telecommunication


The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.

SWIFTNET : During 2007 and 2008, the entire SWIFT Network migrated its infrastructure to a new protocol called SWIFTNet Phase 2. The main difference between Phase 2 and the former arrangement is that Phase 2 requires banks connecting to the network to use a Relationship Management Application (RMA) instead of the former Bilateral key exchange (BKE) system.

Pictorial Representation
Benefits for Corporate : 1) 2) 3) 4) Cash Visibility Enhanced Security Greater Reliability Lower cost of financial transactions 5) Compliance

Some facts and figures Cheque constitutes 52 % in volume and 9 % in value terms of all non cash transactions. The number of non-cash transactions per citizen is very low in India (6 transactions per inhabitant)

Plan of Action
SWIFT
Secondary Research Understanding in detail the various aspects

Getting in touch with relevant person Corporate Analyzing the benefits to corporate using the services Feasibility study for implementing SWIFT Benefits of offering the service Recommendations

Bank

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