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Rbi Payment Systems

RBI is responsible for providing a safe and efficient payment system in India. The BPSS sub-committee regulates payments and settlements according to the PSS Act of 2007. Paper-based payments still account for 60% of non-cash payments by value, but RBI is promoting electronic payments like NEFT, RTGS, and NECS to make the system more cost-effective.

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29 views2 pages

Rbi Payment Systems

RBI is responsible for providing a safe and efficient payment system in India. The BPSS sub-committee regulates payments and settlements according to the PSS Act of 2007. Paper-based payments still account for 60% of non-cash payments by value, but RBI is promoting electronic payments like NEFT, RTGS, and NECS to make the system more cost-effective.

Uploaded by

saipranav.bandaru
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 PDF, TXT or read online on Scribd
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RBI has taken the responsibility to provide a safe, secure, efficient, and easily accessible

payment system. The Board for Regulation and Supervision of Payment and Settlement
Systems (BPSS) is the sub-committee of RBI that does this work.

Payments and settlements in India are regulated by the Payments and Settlement Systems
Act,2007 (PSS Act) and the Payment and Settlement System Regulations, 2008. Only with the
authorisation from RBI, anyone will be able to run a payment system in India.

The payment systems in India involve both paper-based and electronic modes.

Paper-based(cheques and drafts)


60% of the non-cash payments is still paper-based, value wise its 11%. There is a
constant effort from RBI to reduce paper-based payments by popularising electronic
payment products.
But paper-based payments play an important role in India so to make them more
efficient RBI introduced Magnetic Ink Character Recognition (MICR) technology, High
Value clearing for cheques above 1 lakh, Speed clearing and cheque truncation
systems for speeding up the processing of cheques.

Electronic Payments
This is the future of the payment systems in India. RBI is focus on technology-based
solutions is leading the payment systems in India to shift from paper-based to
electronic. Electronic payments are cost-efficient alternatives.

The surge in cheque volume in the mid-eighties and early-nineties prompted a need for
am cost effective alternative. ECS (Credit) scheme was introduced during the 1990s for
bulk and repetitive payments this catered to the requirements of corporates and other
institutions lifting the pressure off cheques for high-volume transactions.

In September 2008, the National Electronic Clearing Service (NECS), was set up at the
National Clearing Cell (NCC), Mumbai. This was a pan India system and leverages the
Core Banking Solutions (CBS) of banks participating in the system. Banks could
participate irrespective of their location in the country.

National Electronic Funds Transfer (NEFT) System: In November 2005 a safe


one-to-one fund transfer system was introduced to meet the requirements of individuals
and corporations.

Real Time Gross Settlement (RTGS)System: RTGS transfers funds from one bank to
another on a real-time basis which means the payment transaction is not subjected to
any waiting period.
Clearing Corporation of India Limited (CCIL): CCIL was set up to handle clearance and
settlement in the money market, government securities, Over the counter products and
foreign exchange markets.

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