UPGRADATION OF PAYMENT SYSTEMS, A NEW PRIORITY FOR BANKS IN INDIA
Payment and Settlement systems form the backbone of any banking system. The payment system assumes importance in the context of domestic financial sector reforms and global financial integration. As mentioned in the vision document of Indian Banks' Association, payment and settlement system will have to be strengthened to ensure transfer of funds on real time basis eliminating risks associated with transactions and the settlement process.
The annual policy for the year 2005-06 announced by the Reserve Bank of India on 28th April 2005 indicates a roadmap for the next three years for upgradation of payment systems in banks in India. Some of the key action plans indicated in the policy, relate to a new umbrella organization for retail payment systems, regulations for various modes of electronic credit transfers, risk mitigation measures to ensure settlement finality, efficiency enhancement measures, customer rights and services and rural reach.
In line with the action plan a Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) has been constituted to prescribe policies relating to the regulation and supervision of all types of payment and settlement systems. RBI has also constituted the Department of Payment and Settlement Systems for assisting BPSS in performing its functions.
The coverage of RTGS and ECS has increased significantly during the last year. Reserve Bank proposes operationalization of the National Electronic Funds Transfer (NEFT) System, which would facilitate electronic transfer of funds and enable T+0 settlement for all networked branches of banks in India.
In view of the increasing dependency of the financial sector on internal and external networks for their operations, information security has assumed greater importance. In this direction, RBI has initiated several measures to ensure information security in banks.
According to Anurag Khanna, CEO of Banknet India, an IT focused banking research company, this environment is expected to result in increased demand by banks in India for technology products and training modules to enhance the staff awareness in the payment systems related areas.