Page 130 - DMGT303_BANKING_AND_INSURANCE

Unit 6: New Age Clearing and New Age Payment

Self Assessment Notes

State whether the following statements are true or false:
6. The RTGS system has brought about some significant benefits to the Indian financial
system.

7. Messages sent through the mode of SFMS by the bankers may not relate to customer
payment and cheques.
8. The RBI's Institute of Development and Research in Banking Technology, Hyderabad has
set up a National Financial Switch that would enable sharing common technology
infrastructure.
9. The RTGS system is not used for customer transactions.
10. The National Inter Bank Payment Gateway Project will function as an integrated payment
service system between the parties concerned.
6.5 Society for World-Wide Interbank Financial
Telecommunication (SWIFT)

SWIFT stands for: Society for Worldwide Interbank Financial Telecommunications. SWIFT is a
Cooperative Society registered in May 1973 in Brussels, Belgium. In an era of information
technology SWIFT offers unique message processing services and provides a very fast, accurate
and authenticated transfer of financial messages on global basis. It is a cooperative society of
international banks and operates a computerized telecommunication system, which allows
rapid, economical, secure and accurate transmission system for essential financial data. SWIFT
services enable the retail as well as corporate customers to transfer funds around the world.

Brief History

A non-profit cooperative of about 239 banks of Europe, North American and Asia came together
and decided to form SWIFT. The objective of the society was to standardize the funds transfer
delivery of payment instructions, enhance the security level of such transactions, cut down the
cost of message transmission payment/settlement system round the clock, seven days a week,
52 weeks a year.
In 1977 around 586 banks were on line on SWIFT system. Now the live participants are 1859 and
live users are 7125 with 2288 members in 192 countries.

Swift Operations

The main objective of Society was to standardize formats for day-to-day International
transactions. SWIFT ensures the uniformity in international standards. The Society devised ten
categories of message from 0 to 9.

Of these messages category - 9 message is an unauthentic message. Other message categories
1,2,4,7 are informative while sending messages are authentic and need not to be separately
tested. Messages in these categories can be sent to only those banks having bilateral agreement
to that effect known as Bilateral Key Exchange (BKE). The messages under category 9 can be sent
or received by any SWIFT member. Bank Identification Code (BIC) directory is supplied by
SWIFT.

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