Page 138 - DMGT303_BANKING_AND_INSURANCE

Unit 6: New Age Clearing and New Age Payment

Trans-European Automated Real-Time Gross Settlement Express Transfer system is an Notes
EURO payment system comprising 15 national RTGS systems working in Europe.

These are other Euro clearing systems, with RTGS plus, being a German hybrid clearing
system and operating as an European oriented real time gross settlement and payment
system. RTGS plus, has over 60 participants.

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.

6.9 Keywords

Bank Identification Code: This BIC is drawn in accordance with norms/instructions of
international organization for standardization (ISO) and International Chamber of Commerce.
Clearing House Automated Payments System (CHAPS): This is a British equivalent to CHIPS,
handling receipts and payments in London.
Deferred net settlement: This concept settles transactions in batches. In DNS, the settlement takes
place at a particular point of time.
EFT and NEFT: These are electronic fund transfer modes that operate on a deferred net settlement
(DNS) basis.

Gross settlement: It means the transaction is settled on one to one basis without bunching with
any other transaction.
RTGS system: This system is a funds transfer mechanism where transfer of money takes place
from one bank to another on a "real time" and on "gross" basis.
Structured Financial Messaging Solution: It is a modularized web enabled software for financial
message communication.

SWIFT: It stands for: Society for Worldwide Interbank Financial Telecommunications.

6.10 Review Questions

1. Discuss the terms real time gross settlement and gross settlement.
2. Explain the concept of RTGS system.

3. What do you mean by EFT and NEFT transactions?
4. Describe the role and functioning of SWIFT.
5. What do you mean by Bank Identification Code?
6. Discuss the role of SWIFT in India.
7. Explain the concept of SFMS.

Answers: Self Assessment

1. Remitting 2. RTGS
3. EFT/NEFT 4. Funds
5. Real time gross settlement 6. True
7. False 8. True

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