The credit and debit transactions of
customers processed by banks involve
a financial claim on other
banks which gets cleared and settled
through the instrumentalities of payment
system. The participating banks in
the payment system have to guard
against various kinds of risks, such as
credit risk, market risk and liquidity risk.
Any failure on the part of a bank to meet
its obligations may lead to bank runs.
There are two types of funds transfers
carried out in a payment system—credit
transfer and debit transfer. Debit transfers
occur in cheque clearance. There is a
risk in debit clearing when a cheque
bounces. In case of credit transfer, the
drawer instructs his banker to debit his
account and credit the amount to the recipient.
Thus, the credit transfer is a safe
mode of payment. Real-time Gross
Settlement (RTGS) is a system of credit
transfer in which settlement takes place
on transaction by transaction basis in the
books of Reserve Bank of India (RBI). Under
RTGS risks are significantly reduced.
With the commencement of the live
operations of RTGS on March 26, 2004, it
has become a red-letter day in the history
of the development of Systemically Important
Payment Systems (SIPS) in the
country. The RTGS system has gone live
with the participation of four banks—
State Bank of India, HDFC Bank,
Saraswat Co-operative Bank and Standard
Chartered Bank. RBI, in addition to
being the service provider, is also a participant
in the RTGS system. The scheduled
banks, primary dealers and clearing
houses will be the members of the RTGS
system. This system, implemented in the
RBI, Mumbai, is the only RTGS system
for the entire banking and financial sector
in the country.
The RTGS system rolled out now
supports interbank and customer-based
interbank transactions. The full-fledged
RTGS system, integrated with the accounting
system of the RBI, provides interface
to other mission-critical applications
(e.g., PDO-NDS-SSS, CFMS and
SFMS). The full-fledged RTGS system
will provide other functionalities such as
automated repo-based intra-day liquidity,
settlement of clearing batches (Multilateral
Net Settlement Batches relating
to MICR clearing, G-sec clearing, rupee
leg of forex clearing, security clearing,
ECS, EFT, etc.). The full-fledged RTGS
system incorporates the best international
features and practices. Efforts
have been made to learn from the forerunners,
while keeping in view the
unique requirements of our financial system. |
