Page 106 - DMGT303_BANKING_AND_INSURANCE

Unit 5: Payment and Settlement System

published by the Committee on Payment and Settlement Systems (CPSS) of the Bank for Notes
International Settlements (BIS) in June 2008, smooth functioning of an individual system
often depends on smooth functioning of other related systems. The Reserve Bank of India
(the Bank) shall continue its initiatives for ensuring smooth operations and proper conduct
of the payment systems. It is of prime importance thus, to be assured that the payment and
settlement systems in the country are duly authorised and operating within the framework
of guidelines applicable to them. The Bank shall also continue to discharge its oversight,
regulatory and developmental responsibilities, apart from raising efficiency standards
and improving performance benchmarks.
1.2 The Approach to be followed on aspects relating to oversight, safety and efficiency and the
various initiatives proposed to be operationalised in the various payment system
components and products in the near-to-short-term are detailed in this Vision Document.
The Vision Document would guide the payments system-related activities of the Bank and
concisely convey the intended direction to realise the Mission Statement components.
1.3 The Mission Statement articulated for payments system objectives of the Bank has six
distinct and succinct components that would be integrated to form the universe of scope
and premise of action. To briefly elucidate, the components represent -

Safety – Keeping the risks in various payment system products minimum and
manageable if they are necessary and unavoidable.
Security – Giving confidence to stakeholders that the payment systems can be trusted
and are reasonably protected from threats and vulnerabilities.
Soundness – Demonstrating the capability and ensuring the payment systems function
in a non-disruptive manner.

Efficiency – Providing measures to assure that the payment systems are cost-effective,
reliable and promote financial and economic stability.

Accessibility – To ensure reach of various payment systems at reasonable cost to
various segments of the populace.
Authorisation – Granting entities authorisation to operate payment systems in
accordance the provisions of the Payment and Settlement Systems Act and the
Regulations framed thereunder.
1.4 The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), is
the apex body for regulation and supervision of payment systems in the country. The
vision would be achieved under the overall guidance, direction and supervision of the
BPSS.

II. Payments System Initiatives

2.1 Several initiatives taken by the Bank for migration of cash payments to the non- cash
mode notwithstanding, use of cash is still substantial. The endeavour to migrate cash
mode of payment to the non-cash modes, be it paper or electronic, will continue. There
have been consistent efforts to move away from paper-based payments to the safer and
more efficient electronic modes of payments.
2.2 Outreach of existing payment system products to cover more geographical areas and
more segments of the populace in the country shall continue to be focused upon.
2.3 The Bank continues to play an important role in introducing customer service initiatives.
Towards this end, the recent steps taken in various payment system segments include –

LOVELY PROFESSIONAL UNIVERSITY 101