Page 111 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes 6.3.5 The Payment and Settlement Systems Act, 2007 provides legal basis for finality of settlement
i.e. it lays down the point of time when the settlement will be deemed final. The Reserve
Bank in order to provide operational clarity is in the process of issuing a Settlement
Finality Directive.
6.3.6 One of the focus areas would be to ensure optimal operation of clearing entities.
Recognising the role played by clearing and settlement facilitating entities such as the
CCIL, the Bank would continue to closely monitor and oversee the operations of such
entities. Insofar as the activities of CCIL are concerned, the operations have grown manifold
and the organisation has been responding well to the changing requirements. Given the
criticality of CCIL in the financial stability of the country, it would be necessary to review
the shareholding pattern and the management structure to further strengthen efficiency
levels so as to result in better confidence among users.
6.4 Infrastructure building and improvement
6.4.1 The Reserve Bank of India will render its views / opinion to National Payments
Corporation of India (NPCI) in preparation of its roadmap. NPCI has been set up as an
umbrella organisation by the banking community to take over the retail payment system
activities in the country. NPCI will be authorized for all the systems set up by it / taken
over by it.

6.4.2 Back up arrangements by way of identifying alternate banks to take over processing and
settlement operations in the event of non-availability of the main bank would ensure
availability of clearing infrastructure during strikes / disruptions. Back up arrangements
by way of first / second alternate banks both for processing and settlement of clearing
transactions will be operated in all major Clearing Houses in the country. Such
arrangements will be put in place at the top 100 Clearing Houses in the country in terms
of volumes handled.
6.4.3 Putting in place alternate settlement arrangements in the event of non-availability of RBI
as a settlement bank will also be explored.

6.4.4 Single Window Facility will be extended to all member banks that are part of Clearing
Houses managed by major banks. This will enable member banks to view balances
maintained by them with these banks at different Clearing Houses and also initiate funds
transfer requests from / to their own accounts.
6.4.5 Secured Web Site (SWS) facility will be extended to cover all MICR-CPCs. The SWS facility
will be used by CPCs / member banks to upload / download clearing data reports. Hard
copies of clearing reports by the CPCs will be provided only in exceptional and need-
based circumstances.
6.5 Promoting electronic modes of payment
6.5.1 All large-value and time-critical payments will be processed only through the electronic
mode.
6.5.2 All bank branches will be enabled with IFSC and MICR codes. The intention is to leave the
user with the choice of product for retail and small-value transactions viz. use MICR for
NECS and IFSC for NEFT.
6.5.3 Reach of electronic products like RTGS, NEFT and NECS will be extended to cover all the
branches of banks, including Regional Rural Banks.
6.5.4 Operating hours of RTGS will be reviewed and considered based on market / user
expectations and stakeholder feedback.

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