Page 234 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 14: Core Banking Solution

Notes
There are a number of other services like renewing or encashing a fixed deposit, payment
of loan installments, even closing an account, etc. which are possible under CBS in any
branch of the bank, without incurring any additional cost to the bank. By extending all
these services in any branch of the bank without any extra charge, banks can win over the
customers and continue to enjoy their patronage, which will help them to expand their
current and saving deposits, a source of low cost deposits for the banks. These may appear
small pinpricks, but they certainly go a long way in making life simpler for a large
number of our people who do not have access or knowledge of internet and computers.
But unfortunately, many public sector banks in our country are either slow in providing
innovative services to the customers or do not bother to find out the customer’s needs.
They only act on getting a direction from the RBI, which alone with a little foresight can
make the life of bank customers a little more comfortable and convenient in these trying
times.
Source: http://www.moneylife.in/article/core-banking-rbis-half-baked-directions-to-banks/27766.html

Self Assessment

Fill in the banks:

1. Core banking is the ........................ of any banking operation.
2. One advantage of CBS is that due to ........................ errors, ........................ is high in
transactions.

14.2 Real Time Gross Settlement (RTGS)

RTGS stands for Real Time Gross Settlement. According to RBI, “RTGS can be defined as the
continuous (real-time) settlement of funds transfers individually on an order by order basis
(without netting)”. This happens through the secure network INFINET provided by IDRBT, an
initiative of Reserve Bank of India for research in Banking Technology. Considering that the
funds settlement takes place in the books of the Reserve Bank of India, the payments are final
and irrevocable.
The RTGS system is primarily meant for large transactions. The minimum amount to be remitted
through RTGS is 2 lacs. There is no upper ceiling for RTGS transactions.

Did u know? CHAPS is one of the largest RTGS systems in the world.
Salient Features
Customers can remit any amount using RTGS. Customers aiming remission of money through
RTGS have to provide the following particulars:
IFSC (Indian Financial System Code) of the beneficiary Bank/Branch.

Full account number of the beneficiary.
Name of the beneficiary.

Task Visit your nearest bank and find out the RTGS system used and how has it proved
beneficial to the bank officials and the customers.

LOVELY PROFESSIONAL UNIVERSITY 229