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National Payment Corpn to be operational by April

The Hindu- Business Line
Banking Bureau , January 18, 2006

THE umbrella organisation for undertaking retail payment and settlement systems, the National Payment Corporation of India, would be operational by April 1.

The Reserve Bank of India is in the process of registering this banks-owned company, said Dr R.B. Burman, Executive Director of RBI.

The company would be jointly owned by private, public and foreign banks, with no bank holding more than 10 per cent stake. "The organisation has progressed quite a bit to give shape to payment systems," he said.

Dr Burman was speaking on the sidelines of a seminar on "Payment Systems in Banks", organised by Banknet India.

The number of branches under the Real Time Gross Settlement has crossed 16,000 in 700 centres and covers 85 per cent of the volume of business, said Dr Burman. About banks charging high rates for RTGS transactions, he said the costs would come down as volumes increase. The target is to bring 5,000 more branches under RTGS by March and 10,000 more branches in another six months. RBI also wants to bring rural payment systems under RTGS, Dr Burman said.

"We are in dialogue with banks to bring more customer transactions under RTGS and also extend the services to commodity exchanges, stock markets and the G-Sec markets," he said.

The central bank is also working on the National Settlement System, under which clearing would be done centrally. This would help improve the liquidity pool of banks.

For rural customers, RBI is in talks with banks to provide low cost ATMs and smart cards.

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