Page 112 - DMGT303_BANKING_AND_INSURANCE

Unit 5: Payment and Settlement System

6.5.5 Number of settlements in NEFT will be reviewed and further increased / rationalised Notes
depending on analysis of volumes, user requirements and efficiency perspectives.

6.5.6 Efforts would be made to provide positive acknowledgement to the remitter confirming
credit to the beneficiary’s account for transactions initiated in NEFT. This would give
comfort to the remitter and enhance his usage.
6.5.7 Electronic modes of payments have the benefits of safety, speed, efficiency, low cost and
audit trails. The Bank will therefore endeavour to facilitate the electronic modes.
6.5.8 Local ECS operating in a number of centres will gradually be subsumed in NECS.
6.5.9 The introduction of Regional ECS (RECS) (introduced in Bangalore) will be explored in
centres where the users (payer and payee) are based in the same region.
6.5.10 Further to the initiatives taken to operationalise Indo-Nepal Remittance Facility Scheme
(for one-way migrant remittances from India to Nepal), operationalisation of electronic
products like NEFT and ECS / NECS in Bhutan will be taken up. In addition, the possibility
of extending National Financial Switch (NFS) to cover banks operating in Bhutan will also
be actively explored.

6.5.11 The Centralised Funds Management System (CFMS) as it presently exists, facilitates
centralised balance viewing of and funds transfer between own accounts of a member
bank maintained with the Bank at different locations. It will be examined if CFMS can be
enabled to facilitate funds transfer between member banks as well.

6.6 Reducing risks in paper-based clearing
6.6.1 Over a period of time, efficiency has been brought into the paper mode of clearing by way
of introduction of MICR processing, computerised settlement, truncating the movement
of physical cheques, etc. Operations across all Clearing Houses in the country will be fully
computerised. Magnetic Media Based Clearing System (MMBCS) software will be used to
computerise processing and settlement operations at all Clearing Houses in the country.
All new Clearing Houses will function only on MMBCS mode.
6.6.2 Operationalising MICR-Cheque Processing Centres (MICR-CPCs) will be considered at
all locations where it is viable and have a daily volume of 10,000 instruments or more.
Such CPCs could be made part of the grid-based CTS. Cheques processed by MICR-CPCs
will cover over 95% of volume and value of cheques processed in the country.
6.6.3 Given the various risks associated with paper-based clearing especially for large- value
transactions, and the advantages available in the electronic products like NEFT / RTGS,
conduct of High Value Clearing will be discontinued at all locations in the country.

6.6.4 Speed Clearing to clear outstation cheques at the centre of presentment will be extended
to cover 100 major centres in the country.
6.6.5 The Bank run Inter-City Clearing will be discontinued at all locations.

6.6.6 Cheque Truncation System (CTS) will be rolled out at Chennai. National roll-out of CTS
will be considered once this project is operationalised.

6.6.7 The prospect of bringing various Clearing Houses in a region (covering adjacent states)
using a Grid-based approach is being examined. Grid-based cheque clearing system to
cover nearby MICR-CPCs and Clearing Houses under the Chennai-grid (covering southern
states) will be implemented. The New Delhi-grid will also be operationalised by extending
the jurisdiction of New Delhi Bankers’ Clearing House to cover nearby cities / states.

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