RTGS influences speed, financial risk, reliability and cost of domestic and international transactions, says R K Patkar, Chairman, The Saraswat Cooperative Bank Limited.

In India, existing payment systems are the cheques clearing and settlement system, securities clearing and settlement system at stock exchange, credit card payment system, and government securities and forex settlement by Clearing Corporation of India Limited (CCIL). These payment systems are susceptible to a range of risks: Credit Risk that is often allied to the default of a counterparty, which will be unable to meet the conditions of the financial contract at that juncture or at any future date, Liquidity Risk that arises when a counterparty cannot provide finality to a financial contract at that juncture, but can do so at a future date, Legal and Operational Risks which respectively would occur due to a weak legal framework and operational inaccuracies, Systemic Risk that is encountered due to system failure where a participant cannot meet the financial obligations when due, which, in turn, may affect other participants in the chain, thereby making the payment systems unstable. Also, the time lag between the initiation of a transaction and its finality is a risk factor with the payment systems.

Financial, contract, obligations, reliability, transactions, Cooperative, Corporation, Operational, securities,speed, financial risk, reliability, domestic, international transactions, settlement system, securities, stock exchange, credit card payment system, government securities,forex settlement, financial contract, Liquidity Risk, financial obligations.