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Electronic Clearing Service(ECS) - FAQs
Q.1. What is Electronic Clearing Service (ECS)?
Ans It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons.
Q.2. What are the types of ECS? In what way they are different from each other?
Ans There are two types of ECS called ECS (Credit) and ECS (Debit).
ECS (Credit) is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment.
ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution.
Working of ECS Credit System
Q.3. Who can initiate an ECS (Credit) transaction?
Ans ECS payments can be initiated by any institution (called ECS user) who have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. ECS users have also to obtain the consent as also the account particulars of the beneficiary for participating the ECS clearings.
The ECS user's bank is called as the sponsor bank under the scheme and the ECS beneficiary account holder is called the destination account holder. The destination account holder's bank or the beneficiary's bank is called the destination bank.
The beneficiaries of the regular or repetitive payments can also request the paying institution to make use of the ECS (Credit) mechanism for effecting payment.
Q.4. How does the ECS Credit system work?
Ans The ECS users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses. The list of the approved clearing houses or the list of centres where the ECS facility has been provided is available at www.rbi.org.in.
The clearing house would debit the account of the ECS user through the account of the sponsor bank on the appointed day and credit the accounts of the recipient banks, for affording onward credit to the accounts of the ultimate beneficiaries.
Q.5. At which of the centres ECS facility is available?
Ans At present ECS facility is available at more than 60 centres and the full list is available at the web-site of RBI.
The beneficiaries need to maintain an account with one of the banks at these centres in order to avail of the benefit of ECS.
Q.6. How does a beneficiary participate in ECS (Credit ) scheme?
Ans The beneficiary has to furnish a mandate giving his consent to avail of the ECS facility. He should also communicate to the ECS user the details of his bank branch and account particulars. Such authorisation form is called a mandate.
Q.7. Will there be any need for the beneficiary to alter this mandate?
Ans Yes. In case the information/account particulars undergo change, then he has to notify the ECS user to carryout changes in order to ensure continued benefits from the ECS user. In case the account particulars at the destination branch do not match, the destination branches would return the credit through their service branch to the clearing house.
Q.8. Who will communicate the beneficiaries' about the credit?
Ans It is the responsibility of the ECS user to communicate to the beneficiary the details of credit that is being afforded to his account, indicating the proposed date of credit, amount and the relative particulars of the payment, so that the beneficiary can match the same with the details furnished by the bank in the account statement/passbook.
Q.9. What are the advantages to the ultimate beneficiary?
Ans
• The end beneficiary need not make frequent visits to his bank for depositing the physical paper instruments.
• He need not apprehend loss of instrument and fraudulent encashment.
• The delay in realisation of proceeds after receipt of paper instrument.
Q.10. How does the scheme benefit the ECS user-like corporate bodies/ institutions?
Ans
• The ECS user saves on administrative machinery for printing, dispatch and reconciliation.
• Avoids chances of loss of instruments in postal transit.
• Avoids chances of frauds due to fraudulent access to the paper instruments and encashment.
• Ability to make payment and ensure that the beneficiaries' account gets credited on a designated date.
Q.11. What are the advantages to the banks?
Ans
• Banks handling ECS get freed of paper handling.
• Paper handling also creates lot of pressure on banks as they have to encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers.
• In ECS banks simply get the payment particulars relating to their customers. All they need to do is to match the account particulars like name, a/c number and credit the proceeds
• Wherever the details do not match, they have to return it back, as per the procedure
Q.12. How can the customer track-down these payments?
Ans Banks have been advised to ensure that the pass-books/statements given to the customers reflect the particulars of the transaction provided by the ECS users. Customers can match these entries with the advice received by them from the payment institution.
Q.13. Is there any limit on the amount of Individual transactions?
Ans No value limit on the amount of individual transactions has been prescribed under the scheme.
Q.14. What are the Processing / Service charges? Is it a costly service?
Ans RBI has since deregulated Service Charges to be levied by sponsor banks. As regards Processing Charges levied by RBI and other banks managing the clearing houses, the same has been waived till March 31, 2009.
Q.15. Is it necessary for the corporates/institutions to collect mandate from the investors?
Ans Yes. A model mandate form has been prescribed for the purpose. Payment processing by banks becomes easier once the database is prepared. SEBI has also issued guidelines to investors to furnish their account numbers in their share applications for printing the same on the interest/dividend warrants, collecting the account particulars and mandates may not pose much problem.
Source: http://rbidocs.rbi.org.in/rdocs/ECS/DOCs/19631.doc
Friday, December 12, 2008
Thursday, December 11, 2008
FAQ's-Electronic Clearing Service-Debit (ECS-Dr)
Electronic Clearing Service(ECS) - FAQs
Q.1. What is Electronic Clearing Service (ECS)?
Ans It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons.
Q.2. What are the types of ECS? In what way they are different from each other?
Ans There are two types of ECS called ECS (Credit) and ECS (Debit).
ECS (Credit) is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment.
ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution.
Working of ECS Debit System
Q.3. What is ECS (Debit) scheme?
Ans It is a scheme under which an account holder with a bank can authorise an ECS user to recover an amount at a prescribed frequency by raising a debit in his account. The ECS user has to collect an authorisation which is called ECS mandate for raising such debits. These mandates have to be endorsed by the bank branch maintaining the account.
Q.4. How does the scheme work?
Ans Any ECS user desirous of participating in the scheme has to register with an approved clearing house. The list of approved clearing houses is available at RBI web-site www.rbi.org.in. He should also collect the mandate forms from the participating destination account holders, with bank's acknowledgement. A copy of the mandate should be available with the drawee bank.
The ECS user has to submit the data in specified form through the sponsor bank to the clearing house. The clearing house would pass on the debit to the destination account holder through the clearing system and credit the sponsor bank's account for onward crediting the ECS user. All the unprocessed debits have to be returned to the sponsor bank within the time frame specified. Banks will treat the electronic instructions received through the clearing system on par with the physical cheques.
Q.5. What are the advantages to the ultimate beneficiary?
· Trouble free- Eliminates the need to go to the collection centres/banks by the customers and no need to stand in long ‘Q’s for payment
· Peace of mind- Customers also need not track down payments by last dates.
· The debits would be monitored by the ECS users.
Q.6. How does the scheme benefit the ECS user-like corporate bodies/ institutions?
Ans
· The ECS user saves on administrative machinery for collecting the cheques, monitoring their realisation and reconciliation
· Better cash management.
· Avoids chances of frauds due to fraudulent access to the paper instruments and encashment.
· realise the payments on a single date instead of fractured receipt of payments.
Q.7. What are the advantages to the banks?
Ans
· Banks handling ECS get freed of paper handling.
· Paper handling also creates lot of pressure on banks as they have to encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers.
· In ECS banks simply get the mandate particulars relating to their customers. All they need to do is to match the account particulars like name, a/c number and debit the accounts.
· Wherever the details do not match, they have to return it back, as per the procedure.
Q.8. Can the mandate given once be withdrawn or stopped?
Ans Yes. The mandate given is on par with a cheque issued by a customer. The only stipulation under the scheme is that the customer has to give prior notice to the ECS user, to ensure that they do not include the debits.
Q.9. Can the customer stipulate any maximum debit, purpose or validity period for the mandate?
Ans Yes. It is left to the choice of the individual customer and the ECS user to finalise these aspects. The mandate can contain a maximum ceiling; it can also specify the purpose as also a validity period.
Q.10. What is the current coverage of the scheme?
Ans At present the scheme is in operation at 15 RBI centres (ie centres where RBI manages the Clearing House operations) and at other centres where Public Sector Banks manage the clearing operations. The list of centres is available at the RBI web-site under the procedural guidelines.
Q.11. Processing charges on individual transactions
Ans RBI has deregulated the service charges that could be levied by sponsor banks. RBI has waived the processing charges levied by RBI and other banks managing the clearing houses till March 2009.
Q.12. Which are the institutions eligible to participate in the ECS Debit scheme?
Ans Utility service providers such as telephone companies, electricity supplying companies, electricity boards, credit card collections, collection of loan installments by banks and financial institutions, and investment schemes of Mutual funds, etc.
Source: http://rbidocs.rbi.org.in/rdocs/ECS/DOCs/19631.doc
Wednesday, December 10, 2008
Debit Cards-Safety Tips
This article offers few tips to keep your Debit Card safe.
One more component of EPayments are Debit Cards. Debit Cards are a very recent phenomena in India, and at present the % of Debit Cards habit, in Shopping establishments is very less.
Majority of the Banks offer a Debit cum ATM Card, instead of two Stand-alone cards.
The end result is the same, i.e Debiting the Card Holder’s Account, with the amount transacted. But, when the Debit cum ATM Card, is lost/misplaced, than the wisdom of two separate cards dawns!
Hence, it is a better idea, to persuade your Banker for Stand-alone Debit Card and ATM Card.
What is the basic difference between a Credit Card and a Debit Card? A credit card enables you to use the bank’s money to pay your bills. This sum has to be repaid within a specified time. Alternatively, you are allowed credit on payment of interest on the unpaid balance.
A debit card allows you to pay for your purchases from your bank account. With a swipe of the debit card through the electronic terminal, at say a departmental store, the amount of your bill is deducted immediately from your bank account. It is as good as paperless or electronic cash.
Debit Cards have witnessed exponential growth. According to a latest release by the RBI here are some facts of Debit Cards in India.
• 2 Million debit card customers are added every month
• The Debit Card user base in India now stands at 85 Million
• Debit Card user base has doubled in 2 years
• State bank of India has issued the largest number of debit cards - 30 million
• ICICI bank has issued 20 million debit cards
• Debit Cards double up as ATM cards and are mostly used for the withdrawing money
• The average spend at merchant establishments using debit cards is mere Rs 1,000
• A very small percentage of people actually use debit cards for retail shopping in India. Most Debit Card purchases are for - Petrol, Restaurant and Clothes.
• People still prefer to use Credit Cards for purchase of Air Tickets, Jewellery or White Goods
Do's and Don't s
All of us carry some form of plastic money with us, whether as a debit card, ATM card, smart card or credit card. Here are Ten Do's and eight Don'ts that will help you safeguard your plastic money.
Do--
1. Do--Sign on the card immediately on receipt. Unsigned cards are invitations for misuse.
2. Do--Keep the card in a prominent place in wallet / vault. This will help you to notice if any of your cards is missing. Many times cardholders realise very late that their card is missing.
3. Do--Ensure that the card you got back after the transaction is yours before putting in the wallet. Many times, Card Member's cards get exchanged at crowded merchant location like service station /Super market.
4. Do--Keep all card number, expiry date and contact number of the issuing bank at a secure place for ready reference. It has to be kept in a different place than where you normally keep cards.
5. Do--Inform issuing bank immediately if you lose the card or it is stolen from you. Always follow up with a written intimation.
6. Do--Memorise PIN and destroy the mailer PIN is an important validation of your identity. The use of PIN along with card is considered as your authentic signature. Keep it secret always.
7. Do--Inform change of address to card issuing bank immediately. Inform postal authorities also about the forwarding address.
8. Do--Keep all charge slips till you get statement from bank Check all charge slips against the statement. If there is a mismatch immediately contact the issuing bank.
9. Do--When going for shopping, carry only one Debit Card.
10. Do--Store the Issuing Bank’s customer service email id in your Blackberry.
Do not --
01. Do not -- Throw away the expired card. Always cut the card before disposing. This will ensure that the expired card cannot be used for counterfeit / skimming.
02. Do not -- Reveal your card number / expiry date /personal details to outsiders. Do not reveal personal details and card numbers in response to any suspicious scheme/ caller. This could be a social engineering attack.
03. Do not -- Hand over your card to any one including your friends / family members. Card is meant for your use only. Even when you are requested to hand it over to authorised bank representative, always ensure to cut the card into two before handing over.
04. Do not -- Allow the card to be taken out of your sight in a merchant location. Insist that all verification to be done in your presence.
05. Do not -- Attempt to use your Debit Care for internet transaction or Provide your card number details on the internet.
06. Do not -- Keep the PIN number written anywhere. Do not reveal your PIN to any one. Do not keep the PIN written anywhere especially in the wallet along with the card.
07. Do not -- Expose the card to excessive heat /magnetic field. In a simple case, where the card came into contact with the magnetic lock on the ladies bag, the data on the magnetic stripe of the card got erased.
08. Do not -- Dispose statement /charge slips /bank mail before destroying. Many identity theft cases had taken place through mail sniffing / garbage pilfering techniques. Please shred the statement /charge slips /bank mail before disposing.
09. Do not -- keep all your cards in one location.
10. Do not -- Ever store your PIN Numbers in your mobile.
Safety Tips
• DO sign your card the moment you receive it.
• DO always sign the card with a ballpoint pen.
• The moment you get your debit card, DO note down the card number and the emergency number. Then, should your card ever get misplaced or stolen, having these numbers ready will enable you to report the loss immediately.
• DO keep these two numbers in a place other than the wallet that holds your card. Then, if your pocket gets picked, you won't have to hunt for the emergency number frantically.
• For reasons of security, DO keep with you a photocopy of the front and reverse of your debit card.
• If you are going abroad, DO make a note of the card company's (Visa/MasterCard/ Amex) emergency phone number in the country you are going to.
• DO report a lost or stolen card immediately.
• DO try and memorize the PIN instead of noting it down somewhere.
• DON'T lend your card to anyone. DO be well aware of who has access to your cards. If a member of your family (spouse, child, parent) borrows your card, with or without your knowledge, you are responsible for the transactions they make with it.
• NEVER reveal the card number unnecessarily.
• DON’T give your debit card number over the phone or the Internet. The ICICI Bank Debit Card cannot be used for transactions through the Internet, phone or e-mail.
• At a shop or restaurant, NEVER leave your card unattended.
• DO make sure that the card returned to you at a merchant establishment is your own.
• When using your card at a merchant establishment, only your signature is needed. NEVER reveal any other personal detail about yourself, be it your address or phone number.
• NEVER sign an incomplete sales slip. DO make sure that totalling has been done.
• DO always keep a copy of the bill and the payment slip for a transaction and the ATM receipts for cash withdrawals.
• DO always check your billing statement. DO check the purchases and DO compare them with the bills and receipts in your possession.
• If you are returning or handing over your card to the bank, DO cut it into two and DO make sure you give it to a bank official only. This will ensure that the card can never be used again.
Again, at the cost of repeation, persuade your Banker to offer Stand-alone Debit and ATM Cards.
One more component of EPayments are Debit Cards. Debit Cards are a very recent phenomena in India, and at present the % of Debit Cards habit, in Shopping establishments is very less.
Majority of the Banks offer a Debit cum ATM Card, instead of two Stand-alone cards.
The end result is the same, i.e Debiting the Card Holder’s Account, with the amount transacted. But, when the Debit cum ATM Card, is lost/misplaced, than the wisdom of two separate cards dawns!
Hence, it is a better idea, to persuade your Banker for Stand-alone Debit Card and ATM Card.
What is the basic difference between a Credit Card and a Debit Card? A credit card enables you to use the bank’s money to pay your bills. This sum has to be repaid within a specified time. Alternatively, you are allowed credit on payment of interest on the unpaid balance.
A debit card allows you to pay for your purchases from your bank account. With a swipe of the debit card through the electronic terminal, at say a departmental store, the amount of your bill is deducted immediately from your bank account. It is as good as paperless or electronic cash.
Debit Cards have witnessed exponential growth. According to a latest release by the RBI here are some facts of Debit Cards in India.
• 2 Million debit card customers are added every month
• The Debit Card user base in India now stands at 85 Million
• Debit Card user base has doubled in 2 years
• State bank of India has issued the largest number of debit cards - 30 million
• ICICI bank has issued 20 million debit cards
• Debit Cards double up as ATM cards and are mostly used for the withdrawing money
• The average spend at merchant establishments using debit cards is mere Rs 1,000
• A very small percentage of people actually use debit cards for retail shopping in India. Most Debit Card purchases are for - Petrol, Restaurant and Clothes.
• People still prefer to use Credit Cards for purchase of Air Tickets, Jewellery or White Goods
Do's and Don't s
All of us carry some form of plastic money with us, whether as a debit card, ATM card, smart card or credit card. Here are Ten Do's and eight Don'ts that will help you safeguard your plastic money.
Do--
1. Do--Sign on the card immediately on receipt. Unsigned cards are invitations for misuse.
2. Do--Keep the card in a prominent place in wallet / vault. This will help you to notice if any of your cards is missing. Many times cardholders realise very late that their card is missing.
3. Do--Ensure that the card you got back after the transaction is yours before putting in the wallet. Many times, Card Member's cards get exchanged at crowded merchant location like service station /Super market.
4. Do--Keep all card number, expiry date and contact number of the issuing bank at a secure place for ready reference. It has to be kept in a different place than where you normally keep cards.
5. Do--Inform issuing bank immediately if you lose the card or it is stolen from you. Always follow up with a written intimation.
6. Do--Memorise PIN and destroy the mailer PIN is an important validation of your identity. The use of PIN along with card is considered as your authentic signature. Keep it secret always.
7. Do--Inform change of address to card issuing bank immediately. Inform postal authorities also about the forwarding address.
8. Do--Keep all charge slips till you get statement from bank Check all charge slips against the statement. If there is a mismatch immediately contact the issuing bank.
9. Do--When going for shopping, carry only one Debit Card.
10. Do--Store the Issuing Bank’s customer service email id in your Blackberry.
Do not --
01. Do not -- Throw away the expired card. Always cut the card before disposing. This will ensure that the expired card cannot be used for counterfeit / skimming.
02. Do not -- Reveal your card number / expiry date /personal details to outsiders. Do not reveal personal details and card numbers in response to any suspicious scheme/ caller. This could be a social engineering attack.
03. Do not -- Hand over your card to any one including your friends / family members. Card is meant for your use only. Even when you are requested to hand it over to authorised bank representative, always ensure to cut the card into two before handing over.
04. Do not -- Allow the card to be taken out of your sight in a merchant location. Insist that all verification to be done in your presence.
05. Do not -- Attempt to use your Debit Care for internet transaction or Provide your card number details on the internet.
06. Do not -- Keep the PIN number written anywhere. Do not reveal your PIN to any one. Do not keep the PIN written anywhere especially in the wallet along with the card.
07. Do not -- Expose the card to excessive heat /magnetic field. In a simple case, where the card came into contact with the magnetic lock on the ladies bag, the data on the magnetic stripe of the card got erased.
08. Do not -- Dispose statement /charge slips /bank mail before destroying. Many identity theft cases had taken place through mail sniffing / garbage pilfering techniques. Please shred the statement /charge slips /bank mail before disposing.
09. Do not -- keep all your cards in one location.
10. Do not -- Ever store your PIN Numbers in your mobile.
Safety Tips
• DO sign your card the moment you receive it.
• DO always sign the card with a ballpoint pen.
• The moment you get your debit card, DO note down the card number and the emergency number. Then, should your card ever get misplaced or stolen, having these numbers ready will enable you to report the loss immediately.
• DO keep these two numbers in a place other than the wallet that holds your card. Then, if your pocket gets picked, you won't have to hunt for the emergency number frantically.
• For reasons of security, DO keep with you a photocopy of the front and reverse of your debit card.
• If you are going abroad, DO make a note of the card company's (Visa/MasterCard/ Amex) emergency phone number in the country you are going to.
• DO report a lost or stolen card immediately.
• DO try and memorize the PIN instead of noting it down somewhere.
• DON'T lend your card to anyone. DO be well aware of who has access to your cards. If a member of your family (spouse, child, parent) borrows your card, with or without your knowledge, you are responsible for the transactions they make with it.
• NEVER reveal the card number unnecessarily.
• DON’T give your debit card number over the phone or the Internet. The ICICI Bank Debit Card cannot be used for transactions through the Internet, phone or e-mail.
• At a shop or restaurant, NEVER leave your card unattended.
• DO make sure that the card returned to you at a merchant establishment is your own.
• When using your card at a merchant establishment, only your signature is needed. NEVER reveal any other personal detail about yourself, be it your address or phone number.
• NEVER sign an incomplete sales slip. DO make sure that totalling has been done.
• DO always keep a copy of the bill and the payment slip for a transaction and the ATM receipts for cash withdrawals.
• DO always check your billing statement. DO check the purchases and DO compare them with the bills and receipts in your possession.
• If you are returning or handing over your card to the bank, DO cut it into two and DO make sure you give it to a bank official only. This will ensure that the card can never be used again.
Again, at the cost of repeation, persuade your Banker to offer Stand-alone Debit and ATM Cards.
Tuesday, December 9, 2008
Credit Card-Some Safety Tips
One of the important components of EPayments world-wide is Credit Card. The word credit comes from Latin, meaning "trust"
Credit is a method of selling goods or services without the buyer having cash in hand. A credit card is only an automatic way of offering credit to a consumer. Today, every credit card carries an identifying number that speeds shopping transactions. Imagine what a credit purchase would be like without it, the sales person would have to record your identity, billing address, and terms of repayment.
Concept of credit card:
Progress in civilisation in its turn has brought out radical changes in the manner of trading. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Cash in the form of currency notes and coins makes up just one form of the payment system. Development in banking while also giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers. The requirement for greater flexibility and convenience has led to electronic payments, and this is where plastic cards have proved their worth. It allows the card issuers to limit the sum of money the card-holders wish to spend. The spending of card-holders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared.
The credit card market in India, which started out in 1981, is on the verge of an unprecedented boom. Credit Card usage is a recently new phenomena in India, and it is only in the last decade, that the Industry has seen a explosive growth. This can be attributed mainly to the growth of India as a IT Superpower.
Credit cards are one of the great conveniences of modern life. They eliminate the need to carry around large amounts of cash for large purchases or emergencies. All of this power creates new risks to your finances. Fortunately, it’s easy to protect yourself with just a few simple steps.
The risks from Credit Cards can be divided into two parts
01) Online Usage at various Internet Portals
02) Offline usage at shops/petrol stations/hotels etc.
Apart from the above, the major risk is through lost /misplaced cards.
It can therefore be said that the biggest risk for credit card frauds online is not from online security problems but from the possibility of the credit card data being offline in a hotel or a shop where the user parts with the card for sometime.
Today I am highlighting few basic tips to keep your Credit Card safe and to prevent its misuse, when the information/credits card falls into wrong hands.
Ultimately keeping you credit card safe is you responsibility. Indeed, in a worst case scenario, if it can be proven you may have been negligent in keeping your credit card safe, you may find yourself liable for the cost of all transactions made fraudulent on your account should you lose the card. To help you avoid this, here basic credit card safety tips:
01) The three Important things necessary to execute a valid Credit Card Transaction on the Internet, are 01) Card Number 02) Expiry Date and 03) CVV Number. On receiving your new Credit Card, affix your signature; Photocopy it, both the sides on a single page. Delete the CVV number. This prevents misuse, when the credit cards are lost, and the thief will not be able to use on Internet Portals, as the CVV number is not there.
02) It is better to have two different cards, one for Internet Transactions and the other for Physical transactions. The CVV Number on the Physical Transaction Card can be deleted, as while physical shopping, the CVV Number, will not be essential It is prudent to keep the two cards separate, as it will be a rare occasion, when both the cards will be required simultaneously.
03) Never have more cards than you need. While it is always advisable that you have more than 1 credit card, in case it gets lost, you should never have more credit cards than you actually need to use. The principal reason why this is the case is because it becomes harder to keep a track of which cards you have and where you have kept them with the more cards you have.
04) Always keep a photocopy of your cards. How many times have you been asked what you card number is only to find yourself looking for your card to get the number? Now, what happens if you have a card stolen and no credit card statement to-hand? You have a problem! For this reason, it is always best practice to take photocopies of you credit cards to so that always know where to find the number should anything unfortunate happen to your card. Keep a copy of your credit card number and the issuer’s phone number somewhere safe – i.e. not in your wallet. This is in case your credit card is lost or stolen you can report it quickly. This is especially important when you go on vacation as you won’t have easy access to a copy of your billing statement. Also, make sure that strangers will not have access to this information – i.e. keep it locked up.
05) Always keep your receipts separate. Among the most important of the basic credit card safety tips you’ll receive is never to keep your credit cards and credit card purchase receipts in the same place – because likely as not if you have lost your card, or if it is stolen, then you’ll have lost or stolen the receipts as well. Now there is no way for you to vouch which transactions were yours and which where not – or, there is no way to tell which was the last genuine transaction you made.
Moreover, never keep a record of your PIN with your card, this is only asking for trouble!
06) Never give your account number to someone you don’t know. If you are ever asked to give your credit card details to someone you don’t know, or who as initiated a discussion with you (rather than the other way round) over the phone or via email, you should always refuse. Worst come to the worst, phone the card issuer and ask them if it is okay for you to divulge the information or phone the enquirer back. If the enquirer seems reluctant to accept this, you have to ask yourself why!
07) Never leave your account details open to public viewing. It may sound rather basic to say you should never let ‘aam janta’ see your credit card account details, but ask yourself this question: “How often have you received a publication subscription form in postcard format?” Now, suppose you complete this with your credit card details filled in. Suddenly half the world has access your credit card number, expiry date and signature!
08) When you use your card in public try to keep the number hidden. Thieves will try to get your credit card number any way they can. That includes looking over your shoulder and memorizing it while you are in line at the store. An easy way to keep the number hidden is to keep your finger over the numbers on one side and keep the other side close to your body. A better way is to keep the card in your wallet as long as possible and put it right back in your wallet as soon as you can.
09) If your credit card is lost or stolen, report it to the issuer immediately. Yes, your credit card agreement probably says you are only liable for Rs.1,000/- of any charges the thief makes, but this is usually contingent upon you reporting the loss in a timely manner. Besides, you cannot use your credit card in physical stores unless you have the actual card and your card issuer will not send you a new one unless you report the loss.
10) Monitor your statement closely. Look for any charges that you did not make. If you are sure you did not make them, report them to your credit card issuer. This is similar to the recommendation to monitor your credit report once or twice per year, but you can and should check your credit card statement every month. Shred your statements and receipts when you dispose of them.
It may sound like a lot of work, but it boils down to keeping your credit card number out of the hands of people who have no legitimate need to have it. Of course not. Treat your credit card number the same sort of protection. With these few simple steps, you can protect yourself and your credit from thieves.
Although the above may sound like 10 basic credit card safety tips you already know, you would be surprised to see how many people fail to follow one or all of them!
Tuesday, December 2, 2008
Frequently Asked Questions (FAQ) on NEFT System National Electronic Funds Transfer System
Q.1. What is NEFT System?
Ans National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch.
Q. 2. Are all bank branches in the system part of the funds transfer network?
Ans No. As on November 28, 2008, 51585 branches of 92 banks are participating. Steps are being taken to widen the coverage both in terms of banks and branches.
Q.3. Whether the system is centre specific or has any geographical restriction?
Ans No, there is no restriction of centres or of any geographical area inside the country. The system uses the concept of centralised accounting system and the bank's account, that are sending or receiving the funds transfer instructions, gets operated at one centre, viz, Mumbai only. The individual branches participating in NEFT could be located anywhere across the country, as detailed in the list provided on our website.
Q.4. What is the funds availability schedule for the beneficiary?
Ans The beneficiary gets the credit on the same Day or the next Day depending on the time of settlement.
Q.5. How does the NEFT system operate?
Step-1: The remitter fills in the NEFT Application form giving the particulars of the beneficiary (bank-branch, beneficiary's name, account type and account number) and authorises the branch to remit the specified amount to the beneficiary by raising a debit to the remitter's account. (This can also be done by using net banking services offered by some of the banks.)
Step-2: The remitting branch prepares a Structured Financial Messaging Solution (SFMS) message and sends it to its Service Centre for NEFT.
Step-3: The Service Centre forwards the same to the local RBI (National Clearing Cell, Mumbai) to be included for the next available settlement. Presently, NEFT is settled in six batches at 0900, 1100, 1200, 1300, 1500 and 1700 hours on weekdays and 0900, 1100 and 1200 hours on Saturdays
Step-4: The RBI at the clearing centre sorts the transactions bank-wise and prepares accounting entries of net debit or credit for passing on to the banks participating in the system. Thereafter, bank-wise remittance messages are transmitted to banks.
Step-5: The receiving banks process the remittance messages received from RBI and effect the credit to the beneficiaries' accounts.
Q.6. How is this NEFT System an improvement over the existing RBI-EFT System?
Ans The RBI-EFT system is confined to the 15 centres where RBI is providing the facility, where as there is no such restriction in NEFT as it is based on the centralised concept. The detailed list of branches of various banks participating in NEFT system is available on our website. The system also uses the state-of-the-art technology for the communication, security etc, and thereby offers better customer service.
Q.7. How is it different from RTGS and EFT?
Ans: NEFT is an electronic payment system to transfer funds from any part of country to any other part of the country and works on Net settlement, unlike RTGS that works on gross settlement and EFT which is restricted to the fifteen centers only where RBI offices are located.
Q.8. Any limit on the amount of individual transaction?
Ans There is no value limit for individual transactions.
Q.9. What about Processing Charges/Service Charges
Ans While RBI has waived the processing charges till March 31, 2009; levy of service charges by banks is left to the discretion of the respective banks. The bank-wise details of charges levied are available on the RBI website.
Q.10. How will I know which are the branches participating in the NEFT?
Ans RBI publishes the list of bank branches participating in the NEFT on its website i.e. https://www.rbi.org.in/scripts/neft.aspx
Q.11. What is IFS Code (IFSC)? How it is different from MICR code?
Ans Indian Financial System Code (IFSC) is an alphanumeric code designed to uniquely identify the bank-branches in India. This is 11-digit code with first 4 characters representing the banks code, the next character reserved as control character (Presently 0 appears in the fifth position) and remaining 6 characters to identify the branch. The MICR code has 9 digits to identify the bank-branch.
Q.12. How I will know, what is the IFS Code of my bank-branch?
Ans RBI had since advised all the banks to print IFSC on cheques leaves issued to their customers. You may also contact your bank-branch and get the IFS Code of that branch.
Q.13. Whom I can contact, in case of non-credit or delay in credit to the beneficiary account?
Ans Contact your bank / branch. If the issue is not resolved satisfactorily, the Customer Service Department of RBI may be contacted on nefthelpdeskncc@rbi.org.in or write to -
The General Manager,
Reserve Bank of India,
National Clearing Centre
First Floor, Free Press House
Nariman Point
Mumbai – 400 027
Q.14. Is it necessary to have a bank account to originate the NEFT transaction?
Ans Yes, NEFT is an account to account funds transfer system.
Q.15. Is it necessary that the beneficiary should have an account at the destination bank-branch?
Ans Yes, NEFT is an account to account funds transfer system.
Q.16. Can I receive foreign remittances through NEFT?
Ans This system can be used only for remitting Indian Rupee among the participating banks within the country.
Q.17. Can I send remittances abroad using the NEFT?
Ans No
Q.18. Can I originate a transaction to receive funds from another account?
Ans No
Q.19. Can I send/receive funds from/to NRI accounts?
Ans: Yes, subject to applicability of provisions of FEMA
Q.20. Would the customer receive an acknowledgement of money credited to the beneficiary?
Ans: No, however electronic acknowledgement is generated for the customer that his money is received by the beneficiary at the sender branch.
Q.21. Would the remitting customer get back the money if it is not credited to the beneficiary’s account?
Ans: Yes, the remitting customer gets back the money if it is not credited to the beneficiary account.
Q.22. Till what time NEFT service window is available?
Ans: There are six settlements at 0900, 1100, 1200, 1300, 1500 and 1700 hours on weekdays and 0900, 1100 and 1200 hours on Saturdays.
Q.23. What is the essential information that the remitting customer would have to furnish for the remittance to be effected?
Ans: The essential information that the remitting customer has to furnish is:
• Beneficiary details such as beneficiary name and account number
• Name and IFSC of the beneficiary bank branch.
Q.24. Is there any way a remitting customer can track the remittance transaction?
Ans: The remitting customer can track the remitting transaction through the remitting branch only, as the remitting branch is informed about the status of the remitted transactions.
Frequently Asked Questions (FAQ) on NEFT System
Courtesy - RBI
Sunday, November 30, 2008
Frequently Asked Questions (FAQ) on RTGS System Real Time Gross Settlement System
Q.1. What is RTGS System?
Ans The acronym "RTGS" stands for Real Time Gross Settlement. RTGS 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. This is the fastest possible money transfer system through the banking channel. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable.
Q.2. How RTGS is different from National Electronics Funds Transfer System (NEFT)?
Ans NEFT is also an electronic fund transfer system that operates on a deferred net settlement (DNS) basis, which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during the week days (9.00 am, 11.00 am, 12.00 noon. 1.00 pm, 3.00 pm and 5.00 pm) and 3 times during Saturdays (9.00 am, 11.00 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours.
Q.3. Is there any minimum / maximum amount stipulation for RTGS transactions?
Ans The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum stipulation has been fixed for EFT and NEFT transactions.
Q.4. What is the time taken for effecting funds transfer from one account to another under RTGS?
Ans. Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary's account within two hours of receiving the funds transfer message.
Q.5. Would the remitting customer receive an acknowledgement of money credited to the beneficiary's account?
Ans The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.
Q.6. Would the remitting customer get back the money if it is not credited to the beneficiary's account? When?
Ans Yes. It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the customer's account is reversed.
Q.7. Till what time RTGS service window is available?
Ans The RTGS service window for customer's transactions is available from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 12.00 noon on Saturdays i.e. to accept the customer transactions for settlement at the RBI during 9.00 hours to 16.30 hours on week days and between 9.00 hours and 12.00 noon on Saturday. However, the timings between these hours would vary depending on the customer timings the branches have. For inter-bank transactions, the service window is available from 9.00 hours to 18.00 hours on week days and from 9.00 hours to 14.00 hours on Saturdays.
Q.8. What about Processing Charges/Service Charges for RTGS transactions?
Ans While RBI has waived its processing charges for all electronic payment products till March 31, 2009, levy of service charges by banks is left to the discretion of the respective banks. The bank-wise details of charges levied are available on the RBI website – www.rbi.org.in.
Q.9. What is the essential information that the remitting customer would have to furnish to a bank for the remittance to be effected?
Ans The remitting customer has to furnish the following information to a bank for effecting a RTGS remittance:
1. Amount to be remitted
2. His account number which is to be debited
3. Name of the beneficiary bank
4. Name of the beneficiary customer
5. Account number of the beneficiary customer
6. Sender to receiver information, if any
7. The IFSC code of the receiving branch
Q.10. How would one know the IFSC code of the receiving branch?
Ans The beneficiary customer can obtain the IFSC code from his branch. The IFSC code is also available in the cheque leaf. This code number and bank branch details can be communicated by the beneficiary to the remitting customer.
Q.11. Do all bank branches in India provide RTGS service?
Ans No, all the bank branches in India are not RTGS enabled. As on November 30, 2008 more than 51,000+ bank branches are RTGS enabled. The list of such branches is available on RBI website www.rbi.org.in/Scripts/Bs_viewRTGS.aspx
Q.12. Is there any way that a remitting customer can track the remittance transaction?
Ans It would depend on the arrangement between the remitting customer and the remitting bank. Some banks with internet banking facility provide this service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile.
Q.13. How can a remitting customer know whether the bank branch of the beneficiary accepts remittance through RTGS?
Ans For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled. The lists are readily available at all RTGS enabled branches. Besides, the information is available at RBI website (http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/ListofRTGSBanks.xls). Considering that more than 51,000 branches at more than 5,500 cities / towns / taluka places are covered under the RTGS system, getting this information would not be difficult.
Q.14. How much volume and value of transactions are routed through RTGS on a typical day?
Ans On a typical day, RTGS handles about 50,000 transactions a day for an approximate value of Rs.3,00,000 crore.
Q.15. Whom do I can contact, in case of non-credit or delay in credit to the beneficiary account?
Ans Contact your bank / branch. If the issue is not resolved satisfactorily, the Customer Service Department of RBI may be contacted at -
The Chief General Manager,
Reserve Bank of India,
Customer Service Department,
1st Floor, Amar Building, Fort,
Mumbai-400001
or send an e-mail at cgmcsd@rbi.org.in
Frequently Asked Questions (FAQ) on RTGS System
Courtesy - RBI
Ans The acronym "RTGS" stands for Real Time Gross Settlement. RTGS 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. This is the fastest possible money transfer system through the banking channel. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bunching with any other transaction. Considering that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable.
Q.2. How RTGS is different from National Electronics Funds Transfer System (NEFT)?
Ans NEFT is also an electronic fund transfer system that operates on a deferred net settlement (DNS) basis, which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during the week days (9.00 am, 11.00 am, 12.00 noon. 1.00 pm, 3.00 pm and 5.00 pm) and 3 times during Saturdays (9.00 am, 11.00 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours.
Q.3. Is there any minimum / maximum amount stipulation for RTGS transactions?
Ans The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum stipulation has been fixed for EFT and NEFT transactions.
Q.4. What is the time taken for effecting funds transfer from one account to another under RTGS?
Ans. Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary's account within two hours of receiving the funds transfer message.
Q.5. Would the remitting customer receive an acknowledgement of money credited to the beneficiary's account?
Ans The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.
Q.6. Would the remitting customer get back the money if it is not credited to the beneficiary's account? When?
Ans Yes. It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the customer's account is reversed.
Q.7. Till what time RTGS service window is available?
Ans The RTGS service window for customer's transactions is available from 9.00 hours to 16.30 hours on week days and from 9.00 hours to 12.00 noon on Saturdays i.e. to accept the customer transactions for settlement at the RBI during 9.00 hours to 16.30 hours on week days and between 9.00 hours and 12.00 noon on Saturday. However, the timings between these hours would vary depending on the customer timings the branches have. For inter-bank transactions, the service window is available from 9.00 hours to 18.00 hours on week days and from 9.00 hours to 14.00 hours on Saturdays.
Q.8. What about Processing Charges/Service Charges for RTGS transactions?
Ans While RBI has waived its processing charges for all electronic payment products till March 31, 2009, levy of service charges by banks is left to the discretion of the respective banks. The bank-wise details of charges levied are available on the RBI website – www.rbi.org.in.
Q.9. What is the essential information that the remitting customer would have to furnish to a bank for the remittance to be effected?
Ans The remitting customer has to furnish the following information to a bank for effecting a RTGS remittance:
1. Amount to be remitted
2. His account number which is to be debited
3. Name of the beneficiary bank
4. Name of the beneficiary customer
5. Account number of the beneficiary customer
6. Sender to receiver information, if any
7. The IFSC code of the receiving branch
Q.10. How would one know the IFSC code of the receiving branch?
Ans The beneficiary customer can obtain the IFSC code from his branch. The IFSC code is also available in the cheque leaf. This code number and bank branch details can be communicated by the beneficiary to the remitting customer.
Q.11. Do all bank branches in India provide RTGS service?
Ans No, all the bank branches in India are not RTGS enabled. As on November 30, 2008 more than 51,000+ bank branches are RTGS enabled. The list of such branches is available on RBI website www.rbi.org.in/Scripts/Bs_viewRTGS.aspx
Q.12. Is there any way that a remitting customer can track the remittance transaction?
Ans It would depend on the arrangement between the remitting customer and the remitting bank. Some banks with internet banking facility provide this service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile.
Q.13. How can a remitting customer know whether the bank branch of the beneficiary accepts remittance through RTGS?
Ans For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled. The lists are readily available at all RTGS enabled branches. Besides, the information is available at RBI website (http://rbidocs.rbi.org.in/rdocs/RTGS/DOCs/ListofRTGSBanks.xls). Considering that more than 51,000 branches at more than 5,500 cities / towns / taluka places are covered under the RTGS system, getting this information would not be difficult.
Q.14. How much volume and value of transactions are routed through RTGS on a typical day?
Ans On a typical day, RTGS handles about 50,000 transactions a day for an approximate value of Rs.3,00,000 crore.
Q.15. Whom do I can contact, in case of non-credit or delay in credit to the beneficiary account?
Ans Contact your bank / branch. If the issue is not resolved satisfactorily, the Customer Service Department of RBI may be contacted at -
The Chief General Manager,
Reserve Bank of India,
Customer Service Department,
1st Floor, Amar Building, Fort,
Mumbai-400001
or send an e-mail at cgmcsd@rbi.org.in
Frequently Asked Questions (FAQ) on RTGS System
Courtesy - RBI
Saturday, November 29, 2008
Frequently Asked Questions (FAQ) on Payment and Settlement Systems
The central bank of any country is usually the driving force in the development of the national payment system. The Reserve Bank of India (RBI) as the central bank of the country has been playing this developmental role and has taken several initiatives for a safe, secure, sound and efficient payment system. Some of the questions frequently asked in this regard are presented below in the form of an FAQ.
1. What is a Payment System?
A Payment System is a mechanism that facilitates transfer of value between a payer and a beneficiary by which the payer discharges the payment obligations to the beneficiary. Payment system enables two-way flow of payments in exchange of goods and services in the economy.
2. What are the components of any payment system?
Payment systems include instruments through which payments can be made, rules, regulations and procedures that guide these payments, institutions which facilitate payment mechanisms and legal systems etc. that are established to facilitate transfer of funds between different participants.
3. Who can use payment systems to make payments?
Payment systems are used by individuals, banks, companies, governments, etc. to make payments to one another. In other words, any body who has to make a payment to any one else can use one or the other form of payment system to make such a payment.
4. What are the ways in which a customer can make payments through banks?
Payments can be made in India in the form of cash, cheque, demand drafts, credit cards, debit cards and also by means of giving electronic instructions to the banker who will make such a payment on behalf of his customers. Electronic payments can be made in the form of Electronic Funds Transfer (EFT), Electronic Clearing Service (ECS) for small value repetitive payments and through Real Time Gross Settlement (RTGS) System for large value payments. A few banks in India have begun to offer certain banking services through Internet that facilitate transfer of funds electronically.
5. How is the payment made when a payer issues a cheque to the payee?
The process of cheque payment starts when a payer gives his personal cheque to the beneficiary. In order to get the actual payment of funds, the receiver of the cheque has to deposit the cheque in his bank account. If the beneficiary has an account in the same bank in the same city then the funds are credited into his account through internal arrangement of the bank. If the beneficiary has an account with any other bank in the same or in any other city, then his banker would ensure that funds are collected from the payer’s banker through the means of a clearinghouse.
6. What is a Clearing House?
A clearinghouse is an association of banks that facilitates payments through cheques between different bank branches within a city / place. It acts as a central meeting place for bankers to exchange the cheques drawn on one another and claim funds for the same. Such operations are called as clearing operations. Generally one bank is appointed as in-charge of the clearing operations. In the four metros and a few other major cities, the Reserve Bank of India is looking after the operations of the clearinghouse. Each clearinghouse has uniform regulations and rules for the conduct of its operations as prescribed by RBI. There are more than 1000 clearing houses operating all over the country facilitating cheque payments. These are managed by the RBI, State Bank of India and other public sector banks.
7. What is the time taken for this clearing process?
Generally, if a cheque is to be paid within the same city (local cheque), it would take 2-3 days. In some large cities, there is a system called High Value Clearing which facilitates completion of cheque clearing cycle on the same day and the customer depositing the cheque is permitted to utilize the proceeds next day morning. However, coverage of this High Value Clearing is very limited and usually available at the branches in the main business area; say Fort and Nariman Point area in Mumbai and Connaught Place in New Delhi.
In the case of outstation cheques, the time taken would vary from three to ten days. RBI has advised all the banks to publicise their cheque collection policy so that customers have an idea as to when the proceeds would be available for utilization by the customer. For delay beyond the normal period, the banks are required to compensate the customer (even without customer asking for the same)
8. Would a bank customer incur any charges by using cheques for payments?
The person receiving payment by means of cheques would incur some charges to realise the funds through this bank. In case of local cheques, no charges are levied. In case of outstation cheques, the bank would take some processing / collection charges depending upon the amount of the cheque and the place from where it has to be realized. The charges levied by the banks are generally decided by the Indian Banks’ Association or the banks themselves. Banks are also required to publicize the schedule of service charges.
9. How can payments be made without use of cheques and cash?
Payments can be made between two or more parties by means of electronic instructions without the use of cheques. Retail payment mechanisms available to facilitate such payments are the Electronic Funds Transfer, Electronic Clearing Service, credit / debit cards etc.
10. Can a customer of a bank use the ATM of some other bank?
Yes, if the customer’s bank has an arrangement with the bank owning the ATM. Presently, stand alone ATMs are very few and usually such stand alone ATMs are installed at the branch premises. In case ATM of another bank is used, normally a service charge called "inter-change fee" is levied on the customer.
11. Are ATMs used only for cash withdrawal?
In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry and several other banking transactions which the bank/s owning the ATM's might want to offer.
12. What is the role of credit / debit cards in payment systems?
Credit / Debit cards are being widely used in the country as they provide a convenient form of making payments for goods and services without the use of cheques and cash. Banks issue credit cards to their customers. The merchant establishment who accepts credit / debit card payments will claim the amount from the customer’s bank through his own bank.
13. How is a Debit Card different from Credit Card?
Debit Card is a direct account access card. (Amount transacted gets debited immediately). The amount permitted to be transacted in debit card will be to the extent of the amount standing to the credit of the card user’s account. On the other hand, a credit card involves provision of credit to the card user, which is paid by the card user on receipt of the bill either in full or partially in installments.
14. What is EFT?
Electronic Funds Transfer (EFT) is a system whereby anyone who wants to make payment to another person / company etc. can approach his bank and make cash payment or give instructions / authorisation to transfer funds directly from his own account to the bank account of the receiver / beneficiary. Complete details such as the receiver’s name, bank account number, account type (savings or current account), bank name, city, branch name etc should be furnished to the bank at the time of requesting for such transfers so that the amount reaches the beneficiaries’ account correctly and faster. RBI is the service provider for EFT.
15. Can I use EFT to transfer funds anywhere in India?
As of now, EFT facility is available for transfer of funds between bank branches in about 15 major cities and towns across the country. Under another special scheme called as Special EFT, many more select branches (which are on the computer network of the banks) in over 200 cities have been brought into the fold of funds transfer electronically. The details of the cities and branches can be had from the respective banks as also from the RBI website.
16. How long does it take to transfer funds through EFT?
Funds transfer normally takes place on the same day or at the most the next working day depending upon the time of requesting / effecting such funds transfers. The customer should confirm this aspect from his bank at the time of requesting the funds transfer.
17. Are there any charges for transferring funds through EFT?
The banks generally charge some processing charges for EFT just as in the case of other services like demand drafts, pay orders, etc. The actual charges depend upon the amount and the banker-customer relationship. However, for the present, the RBI has waived all its charges on EFT that were being recovered from the banks for processing such funds transfer transactions at the clearing houses run by RBI. This has certainly reduced the processing cost for the banks also.
18. How can I make use of Electronic Clearing Service for receiving funds / making payments?
Electronic Clearing Service (ECS) is a retail payment system that can be used to make bulk payments / receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively smaller amount. This facility is meant for companies and government departments to make/receive large volumes of payments rather than for funds transfers by individuals. The ECS facility is available in 47 centres across India operated by RBI at places where it manages the clearing houses and by SBI and its associates in other centres. The ECS is further divided into two types – ECS (Credit) to make bulk payments to individuals/vendors and ECS (Debit) to receive bulk utility payments from individuals.
19. What is ECS (Credit)?
Under ECS (Credit) one entity / company would make payments from its bank account to a number of recipients by direct credit to their bank accounts. For instance, companies make use of ECS (Credit) to make periodic dividend / interest payments to their investors. Similarly, employers like banks, government departments, etc make monthly salary payments to their employees through ECS (Credit). Payments of repetitive nature to be made to vendors can also be made through this mode. For this purpose, the company or entity making the payment has to have the bank account details of the individual beneficiaries. The payments are affected through a sponsor bank of the Company making the payment and such bank has to ensure that there are enough funds in its accounts on the settlement day to offset the total amount for which the payment is being made for that particular settlement. Sponsor bank is generally the bank with whom the company maintains its account.
20. What is ECS (Debit)?
ECS (Debit) is mostly used by utility companies like telephone companies, electricity companies etc. to receive the bill payments directly from the bank account of their customers. Instead of making electricity bill payment through cash or by means of cheque, a consumer (individuals as well as companies) can opt to make bill payments directly into the account of the electricity provider / company / board from his own bank account. For this purpose, the consumer has to give an application to the utility company (provided the company has opted for the ECS (Debit) scheme), providing details of bank account from which the monthly / bi-monthly bill amount can be directly deducted. Such details have to be authenticated by the bank of the customer who opts for making payments through this mode. Once this option is given, the utility company would advise the consumer’s bank to debit the bill amount to his account on the due date of the bill and transfer the amount to the company’s own account. This is done by crediting the account of the sponsor bank, which again is generally the bank with whom the company receiving the payments maintains the account with. The actual bill would be sent to the consumer as usual at his address as before.
21. Are there any charges for using the ECS?
As in the case of EFT, RBI has waived all its processing charges to the banks for the present. The banks, however, are free to charge a fee from their corporate customers for use of this facility.
22. How can an NRI remit money into India?
As an NRI, an individual can remit funds into India through normal banking channels using the facilities provided by the overseas bank. Alternately, an NRI can also remit funds through authorised, Money Transfer Agents (MTA). Of late, a good number of banks have launched their inward remittance products, which facilitate funds transfer in matter of hours.
23. How do banks make payments for their own transactions?
Ordinarily, the transactions among banks (not pertaining to customer transactions) would be for large values. Hence such transactions are called as large-value funds transfers. The actual transfer of funds will take place through the accounts, which the banks maintain with the RBI. For this purpose, banks can give cheques drawn on their account maintained with RBI to one another, which will then be processed through the clearinghouse. Alternatively, they can also make use of large value payment system called as Real Time Gross Settlement System where funds transfer takes place instantaneously, based on electronic instructions just like EFT in the case of individuals and companies.
24. What is Real Time Gross Settlement System?
Real Time Gross Settlement (RTGS) system, introduced in India since March 2004, is a system through which electronic instructions can be given by banks to transfer funds from their account to the account of another bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer between banks takes place on a ‘real time’ basis. Therefore, money can reach the beneficiary instantaneously and the beneficiary’s bank has the responsibility to credit the beneficiary’s account within two hours.
25. Can individuals make payments through RTGS system?
Yes, individuals can transfer funds through RTGS system through their banks. Though the system is primarily designed for large value payments, bank customers have the choice of availing of the RTGS facility for their time critical low value payments as well. There is no definition of "low value" or "large value" for the purpose of RTGS transaction. As on November 2008, RTGS facility was available at more than 51000 bank branches at 600+ cities and towns in India. At present, not all bank branches are enabled to process RTGS system funds transfer. A customer who desires to use this facility should approach his bank to find out whether his own bank branch as well as the beneficiary’s bank branch is enabled to transfer funds through RTGS system. Banks may levy charges for such funds transfers at their discretion and based on the customer-bank relationship. The customer, in turn, is entitled to claim interest for delay in credit of funds into the beneficiary’s account.
26. Whom should I approach in case of any complaints relating to customer services under payment systems?
The customer may approach the bank concerned to redress the complaint. In case of lack of response / satisfactory redressal by the bank, the customer may approach the Grievance Redressal Cell in the local RBI office, if any. The customer may also approach the office of the Banking Ombudsman for redressal of his complaint.
27. What is Cheque Truncation?
Cheque Truncation is a system of cheque clearing and settlement between banks based on electronic data/images or both without physical exchange of instrument.
28. How would Cheque Truncation benefit the bank customers?
The bank customers would get their cheques realized faster as T+0 local clearing and T+1 inter-city clearing is possible in Cheque Truncation System (CTS). As straight through processing and automated payment processing are enabled by CTS faster realization is accompanied by a reduction in costs for the customers and the banks. It is also possible for banks to offer innovative products and services based on CTS. The banks have additional advantage of reduced reconciliation and clearing frauds.
29. What is the role of RBI in payment systems?
The RBI, apart from the role of regulator and supervisor of payment systems, plays the role of a Settlement Bank apart from being a catalyst, an operator and a user. The RBI has been taking initiatives in introducing new modes of more efficient and safe means of effecting payments in the country on a continuous basis. The RBI introduced the system of Magnetic Ink Character Recognition (MICR) based cheque clearing during late 80's for four metropolitan cities (Mumbai, New Delhi, Chennai and Kolkata). During mid 90s, electronic payment systems like ECS and EFT were introduced. During 2004-05, RTGS was introduced. Besides introducing these newer mechanisms or systems, the RBI has also been constantly ensuring that the existing systems are upgraded / refined to increase their efficiency and to meet the requirements of customers. Taking advantage of advancements in technology, the RBI has brought in additional safety measures in these systems to make them secure and also to maintain the integrity of such transactions.
Besides operating the various components of payments systems, RBI also participates in these systems as a user. RBI acts as a service provider and after the system stabilizes, the responsibility is handed over to other banks / institutions for further development. RBI also has the role of regulating and supervising the various payment systems.
30. How does RBI regulate payment systems?
The Board for regulation and supervision of Payment and Settlement Systems (BPSS) is a sub-committee of the Central Board of the RBI and is the highest policy making body on payment system. The Board is assisted by a technical committee called National Payments Council (NPC) with eminent experts in the field as members. The Board as well as the council are assisted by a newly created department the Department of Payment and settlement Systems (DPSS). The Board has been entrusted with the responsibility to authorise, prescribe policies and set standards for all existing and future payment systems in the country. The Board also has the powers to determine membership criteria to these systems and related policies.
31. What were the major developments in payment and settlement systems in India during the last decade?
During the last decade, payment system services offered by banks to the common persons as well as the corporate bodies have improved substantially. It is partly due to increased use of technology in service delivery and partly due to procedural changes necessitated in the wake of competition amongst the banks.
Changes visible are the following:
Firstly, cheque-clearing system has vastly improved. Time taken for collecting a local cheque has now reduced to two or three days. It used to take 4 or 5 days earlier. At 42 large cities automated cheque processing centers have been set up where cheques received by all bank branches in the city are processed at night. Time taken for collection of outstation cheques has also been reduced. Now it takes 4 to 10 days depending on location of the paying centres. It used to take 10 days to one month earlier.
Secondly, during the 90s, a few variants of electronic payment products were introduced. Electronic Clearing Service (ECS) helped large corporate bodies to pay their dividend, interest and refunds electronically on the due date. Not only the investing public could get the payment on the due date, but also the corporates could save substantially by not having to print paper instruments. One can imagine the extent of savings from the fact that 36 million of such transactions were routed through ECS during the year 2005-06. Similarly, the utility bodies are now in a position to collect their bills through ECS right on the due date. Cash flow management is getting easier. There were 16 million such transactions during 2004-05.
Thirdly, extension of electronic funds transfer (EFT) facility by the banks has altered the money transfer scenario. Using the EFT infrastructure laid by the Reserve Bank, commercial banks have started offering same-day funds transfer facility to their customers. Bank customers at 15 major centers can transfer funds to one another using this facility. A variant of EFT called Special-EFT has been designed specially for the networked branches which facilitates funds transfer on the same day within the closed group of computerized and networked branches located any where in the country. Banks with Internet banking infrastructure are receiving requests from their customers for EFT and executing the requests in a straight-through manner.
Fourthly, launching of Real-Time Gross settlement (RTGS) system by RBI has added a new dimension to EFT scenario. Corporate bodies and other bank customers have now the option to transfer funds to designated branches (around 9600 at present) instantaneously. As per the RTGS operating rules, if the credit cannot be applied, it should be returned within 2 hours- meaning thereby that the maximum delay can be 2 hours.
Fifthly, there has been a rapid growth in installation of ATMs in the country. Bank customers can now access their accounts for withdrawal of cash, deposit of cash, balance enquiry, requisition of cheque books, issue of stop-instruction etc. on 24X 7 basis. ATM population is around 16,000 in the country at present and in increasing by a few hundreds each month.
Sixthly, In the last three or four years there has been a phenomenal growth in use of payment cards (debit and credit cards) as a payment medium in the country. As at the end of December 2004 there were 4.33 crore-payment cards in the country. The increasing use of cards is not only due to the safety and convenience aspect but also on account of retail consumer boom, which has taken place in the country.
1. What is a Payment System?
A Payment System is a mechanism that facilitates transfer of value between a payer and a beneficiary by which the payer discharges the payment obligations to the beneficiary. Payment system enables two-way flow of payments in exchange of goods and services in the economy.
2. What are the components of any payment system?
Payment systems include instruments through which payments can be made, rules, regulations and procedures that guide these payments, institutions which facilitate payment mechanisms and legal systems etc. that are established to facilitate transfer of funds between different participants.
3. Who can use payment systems to make payments?
Payment systems are used by individuals, banks, companies, governments, etc. to make payments to one another. In other words, any body who has to make a payment to any one else can use one or the other form of payment system to make such a payment.
4. What are the ways in which a customer can make payments through banks?
Payments can be made in India in the form of cash, cheque, demand drafts, credit cards, debit cards and also by means of giving electronic instructions to the banker who will make such a payment on behalf of his customers. Electronic payments can be made in the form of Electronic Funds Transfer (EFT), Electronic Clearing Service (ECS) for small value repetitive payments and through Real Time Gross Settlement (RTGS) System for large value payments. A few banks in India have begun to offer certain banking services through Internet that facilitate transfer of funds electronically.
5. How is the payment made when a payer issues a cheque to the payee?
The process of cheque payment starts when a payer gives his personal cheque to the beneficiary. In order to get the actual payment of funds, the receiver of the cheque has to deposit the cheque in his bank account. If the beneficiary has an account in the same bank in the same city then the funds are credited into his account through internal arrangement of the bank. If the beneficiary has an account with any other bank in the same or in any other city, then his banker would ensure that funds are collected from the payer’s banker through the means of a clearinghouse.
6. What is a Clearing House?
A clearinghouse is an association of banks that facilitates payments through cheques between different bank branches within a city / place. It acts as a central meeting place for bankers to exchange the cheques drawn on one another and claim funds for the same. Such operations are called as clearing operations. Generally one bank is appointed as in-charge of the clearing operations. In the four metros and a few other major cities, the Reserve Bank of India is looking after the operations of the clearinghouse. Each clearinghouse has uniform regulations and rules for the conduct of its operations as prescribed by RBI. There are more than 1000 clearing houses operating all over the country facilitating cheque payments. These are managed by the RBI, State Bank of India and other public sector banks.
7. What is the time taken for this clearing process?
Generally, if a cheque is to be paid within the same city (local cheque), it would take 2-3 days. In some large cities, there is a system called High Value Clearing which facilitates completion of cheque clearing cycle on the same day and the customer depositing the cheque is permitted to utilize the proceeds next day morning. However, coverage of this High Value Clearing is very limited and usually available at the branches in the main business area; say Fort and Nariman Point area in Mumbai and Connaught Place in New Delhi.
In the case of outstation cheques, the time taken would vary from three to ten days. RBI has advised all the banks to publicise their cheque collection policy so that customers have an idea as to when the proceeds would be available for utilization by the customer. For delay beyond the normal period, the banks are required to compensate the customer (even without customer asking for the same)
8. Would a bank customer incur any charges by using cheques for payments?
The person receiving payment by means of cheques would incur some charges to realise the funds through this bank. In case of local cheques, no charges are levied. In case of outstation cheques, the bank would take some processing / collection charges depending upon the amount of the cheque and the place from where it has to be realized. The charges levied by the banks are generally decided by the Indian Banks’ Association or the banks themselves. Banks are also required to publicize the schedule of service charges.
9. How can payments be made without use of cheques and cash?
Payments can be made between two or more parties by means of electronic instructions without the use of cheques. Retail payment mechanisms available to facilitate such payments are the Electronic Funds Transfer, Electronic Clearing Service, credit / debit cards etc.
10. Can a customer of a bank use the ATM of some other bank?
Yes, if the customer’s bank has an arrangement with the bank owning the ATM. Presently, stand alone ATMs are very few and usually such stand alone ATMs are installed at the branch premises. In case ATM of another bank is used, normally a service charge called "inter-change fee" is levied on the customer.
11. Are ATMs used only for cash withdrawal?
In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry and several other banking transactions which the bank/s owning the ATM's might want to offer.
12. What is the role of credit / debit cards in payment systems?
Credit / Debit cards are being widely used in the country as they provide a convenient form of making payments for goods and services without the use of cheques and cash. Banks issue credit cards to their customers. The merchant establishment who accepts credit / debit card payments will claim the amount from the customer’s bank through his own bank.
13. How is a Debit Card different from Credit Card?
Debit Card is a direct account access card. (Amount transacted gets debited immediately). The amount permitted to be transacted in debit card will be to the extent of the amount standing to the credit of the card user’s account. On the other hand, a credit card involves provision of credit to the card user, which is paid by the card user on receipt of the bill either in full or partially in installments.
14. What is EFT?
Electronic Funds Transfer (EFT) is a system whereby anyone who wants to make payment to another person / company etc. can approach his bank and make cash payment or give instructions / authorisation to transfer funds directly from his own account to the bank account of the receiver / beneficiary. Complete details such as the receiver’s name, bank account number, account type (savings or current account), bank name, city, branch name etc should be furnished to the bank at the time of requesting for such transfers so that the amount reaches the beneficiaries’ account correctly and faster. RBI is the service provider for EFT.
15. Can I use EFT to transfer funds anywhere in India?
As of now, EFT facility is available for transfer of funds between bank branches in about 15 major cities and towns across the country. Under another special scheme called as Special EFT, many more select branches (which are on the computer network of the banks) in over 200 cities have been brought into the fold of funds transfer electronically. The details of the cities and branches can be had from the respective banks as also from the RBI website.
16. How long does it take to transfer funds through EFT?
Funds transfer normally takes place on the same day or at the most the next working day depending upon the time of requesting / effecting such funds transfers. The customer should confirm this aspect from his bank at the time of requesting the funds transfer.
17. Are there any charges for transferring funds through EFT?
The banks generally charge some processing charges for EFT just as in the case of other services like demand drafts, pay orders, etc. The actual charges depend upon the amount and the banker-customer relationship. However, for the present, the RBI has waived all its charges on EFT that were being recovered from the banks for processing such funds transfer transactions at the clearing houses run by RBI. This has certainly reduced the processing cost for the banks also.
18. How can I make use of Electronic Clearing Service for receiving funds / making payments?
Electronic Clearing Service (ECS) is a retail payment system that can be used to make bulk payments / receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively smaller amount. This facility is meant for companies and government departments to make/receive large volumes of payments rather than for funds transfers by individuals. The ECS facility is available in 47 centres across India operated by RBI at places where it manages the clearing houses and by SBI and its associates in other centres. The ECS is further divided into two types – ECS (Credit) to make bulk payments to individuals/vendors and ECS (Debit) to receive bulk utility payments from individuals.
19. What is ECS (Credit)?
Under ECS (Credit) one entity / company would make payments from its bank account to a number of recipients by direct credit to their bank accounts. For instance, companies make use of ECS (Credit) to make periodic dividend / interest payments to their investors. Similarly, employers like banks, government departments, etc make monthly salary payments to their employees through ECS (Credit). Payments of repetitive nature to be made to vendors can also be made through this mode. For this purpose, the company or entity making the payment has to have the bank account details of the individual beneficiaries. The payments are affected through a sponsor bank of the Company making the payment and such bank has to ensure that there are enough funds in its accounts on the settlement day to offset the total amount for which the payment is being made for that particular settlement. Sponsor bank is generally the bank with whom the company maintains its account.
20. What is ECS (Debit)?
ECS (Debit) is mostly used by utility companies like telephone companies, electricity companies etc. to receive the bill payments directly from the bank account of their customers. Instead of making electricity bill payment through cash or by means of cheque, a consumer (individuals as well as companies) can opt to make bill payments directly into the account of the electricity provider / company / board from his own bank account. For this purpose, the consumer has to give an application to the utility company (provided the company has opted for the ECS (Debit) scheme), providing details of bank account from which the monthly / bi-monthly bill amount can be directly deducted. Such details have to be authenticated by the bank of the customer who opts for making payments through this mode. Once this option is given, the utility company would advise the consumer’s bank to debit the bill amount to his account on the due date of the bill and transfer the amount to the company’s own account. This is done by crediting the account of the sponsor bank, which again is generally the bank with whom the company receiving the payments maintains the account with. The actual bill would be sent to the consumer as usual at his address as before.
21. Are there any charges for using the ECS?
As in the case of EFT, RBI has waived all its processing charges to the banks for the present. The banks, however, are free to charge a fee from their corporate customers for use of this facility.
22. How can an NRI remit money into India?
As an NRI, an individual can remit funds into India through normal banking channels using the facilities provided by the overseas bank. Alternately, an NRI can also remit funds through authorised, Money Transfer Agents (MTA). Of late, a good number of banks have launched their inward remittance products, which facilitate funds transfer in matter of hours.
23. How do banks make payments for their own transactions?
Ordinarily, the transactions among banks (not pertaining to customer transactions) would be for large values. Hence such transactions are called as large-value funds transfers. The actual transfer of funds will take place through the accounts, which the banks maintain with the RBI. For this purpose, banks can give cheques drawn on their account maintained with RBI to one another, which will then be processed through the clearinghouse. Alternatively, they can also make use of large value payment system called as Real Time Gross Settlement System where funds transfer takes place instantaneously, based on electronic instructions just like EFT in the case of individuals and companies.
24. What is Real Time Gross Settlement System?
Real Time Gross Settlement (RTGS) system, introduced in India since March 2004, is a system through which electronic instructions can be given by banks to transfer funds from their account to the account of another bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer between banks takes place on a ‘real time’ basis. Therefore, money can reach the beneficiary instantaneously and the beneficiary’s bank has the responsibility to credit the beneficiary’s account within two hours.
25. Can individuals make payments through RTGS system?
Yes, individuals can transfer funds through RTGS system through their banks. Though the system is primarily designed for large value payments, bank customers have the choice of availing of the RTGS facility for their time critical low value payments as well. There is no definition of "low value" or "large value" for the purpose of RTGS transaction. As on November 2008, RTGS facility was available at more than 51000 bank branches at 600+ cities and towns in India. At present, not all bank branches are enabled to process RTGS system funds transfer. A customer who desires to use this facility should approach his bank to find out whether his own bank branch as well as the beneficiary’s bank branch is enabled to transfer funds through RTGS system. Banks may levy charges for such funds transfers at their discretion and based on the customer-bank relationship. The customer, in turn, is entitled to claim interest for delay in credit of funds into the beneficiary’s account.
26. Whom should I approach in case of any complaints relating to customer services under payment systems?
The customer may approach the bank concerned to redress the complaint. In case of lack of response / satisfactory redressal by the bank, the customer may approach the Grievance Redressal Cell in the local RBI office, if any. The customer may also approach the office of the Banking Ombudsman for redressal of his complaint.
27. What is Cheque Truncation?
Cheque Truncation is a system of cheque clearing and settlement between banks based on electronic data/images or both without physical exchange of instrument.
28. How would Cheque Truncation benefit the bank customers?
The bank customers would get their cheques realized faster as T+0 local clearing and T+1 inter-city clearing is possible in Cheque Truncation System (CTS). As straight through processing and automated payment processing are enabled by CTS faster realization is accompanied by a reduction in costs for the customers and the banks. It is also possible for banks to offer innovative products and services based on CTS. The banks have additional advantage of reduced reconciliation and clearing frauds.
29. What is the role of RBI in payment systems?
The RBI, apart from the role of regulator and supervisor of payment systems, plays the role of a Settlement Bank apart from being a catalyst, an operator and a user. The RBI has been taking initiatives in introducing new modes of more efficient and safe means of effecting payments in the country on a continuous basis. The RBI introduced the system of Magnetic Ink Character Recognition (MICR) based cheque clearing during late 80's for four metropolitan cities (Mumbai, New Delhi, Chennai and Kolkata). During mid 90s, electronic payment systems like ECS and EFT were introduced. During 2004-05, RTGS was introduced. Besides introducing these newer mechanisms or systems, the RBI has also been constantly ensuring that the existing systems are upgraded / refined to increase their efficiency and to meet the requirements of customers. Taking advantage of advancements in technology, the RBI has brought in additional safety measures in these systems to make them secure and also to maintain the integrity of such transactions.
Besides operating the various components of payments systems, RBI also participates in these systems as a user. RBI acts as a service provider and after the system stabilizes, the responsibility is handed over to other banks / institutions for further development. RBI also has the role of regulating and supervising the various payment systems.
30. How does RBI regulate payment systems?
The Board for regulation and supervision of Payment and Settlement Systems (BPSS) is a sub-committee of the Central Board of the RBI and is the highest policy making body on payment system. The Board is assisted by a technical committee called National Payments Council (NPC) with eminent experts in the field as members. The Board as well as the council are assisted by a newly created department the Department of Payment and settlement Systems (DPSS). The Board has been entrusted with the responsibility to authorise, prescribe policies and set standards for all existing and future payment systems in the country. The Board also has the powers to determine membership criteria to these systems and related policies.
31. What were the major developments in payment and settlement systems in India during the last decade?
During the last decade, payment system services offered by banks to the common persons as well as the corporate bodies have improved substantially. It is partly due to increased use of technology in service delivery and partly due to procedural changes necessitated in the wake of competition amongst the banks.
Changes visible are the following:
Firstly, cheque-clearing system has vastly improved. Time taken for collecting a local cheque has now reduced to two or three days. It used to take 4 or 5 days earlier. At 42 large cities automated cheque processing centers have been set up where cheques received by all bank branches in the city are processed at night. Time taken for collection of outstation cheques has also been reduced. Now it takes 4 to 10 days depending on location of the paying centres. It used to take 10 days to one month earlier.
Secondly, during the 90s, a few variants of electronic payment products were introduced. Electronic Clearing Service (ECS) helped large corporate bodies to pay their dividend, interest and refunds electronically on the due date. Not only the investing public could get the payment on the due date, but also the corporates could save substantially by not having to print paper instruments. One can imagine the extent of savings from the fact that 36 million of such transactions were routed through ECS during the year 2005-06. Similarly, the utility bodies are now in a position to collect their bills through ECS right on the due date. Cash flow management is getting easier. There were 16 million such transactions during 2004-05.
Thirdly, extension of electronic funds transfer (EFT) facility by the banks has altered the money transfer scenario. Using the EFT infrastructure laid by the Reserve Bank, commercial banks have started offering same-day funds transfer facility to their customers. Bank customers at 15 major centers can transfer funds to one another using this facility. A variant of EFT called Special-EFT has been designed specially for the networked branches which facilitates funds transfer on the same day within the closed group of computerized and networked branches located any where in the country. Banks with Internet banking infrastructure are receiving requests from their customers for EFT and executing the requests in a straight-through manner.
Fourthly, launching of Real-Time Gross settlement (RTGS) system by RBI has added a new dimension to EFT scenario. Corporate bodies and other bank customers have now the option to transfer funds to designated branches (around 9600 at present) instantaneously. As per the RTGS operating rules, if the credit cannot be applied, it should be returned within 2 hours- meaning thereby that the maximum delay can be 2 hours.
Fifthly, there has been a rapid growth in installation of ATMs in the country. Bank customers can now access their accounts for withdrawal of cash, deposit of cash, balance enquiry, requisition of cheque books, issue of stop-instruction etc. on 24X 7 basis. ATM population is around 16,000 in the country at present and in increasing by a few hundreds each month.
Sixthly, In the last three or four years there has been a phenomenal growth in use of payment cards (debit and credit cards) as a payment medium in the country. As at the end of December 2004 there were 4.33 crore-payment cards in the country. The increasing use of cards is not only due to the safety and convenience aspect but also on account of retail consumer boom, which has taken place in the country.
Thursday, November 6, 2008
Cap on Outstation Cheque Collection Charges -- A subtle way by Reserve Bank of India to encourage EPayments
Reserve Bank of India, vide its. Letter dated October 8, 2008, addressed to Banks, has capped the charges on Outstation Cheque Collection Charges.
In brief, Outstation cheque collection Charges have to be:
a) Up to Rs. 10,000 not exceeding Rs. 50 per instrument
Rs. 10,000 to Rs. 1,00,000 not exceeding Rs. 100 per instrument
Rs.1,00,001 and above not exceeding Rs. 150 per instrument
More can be known at
http://www.indianexpress.com/news/Reserve Bank of Indiai-plans-to-cap-outstation-cheque-collection-charges/360377/
The main reason for capping the charges by Reserve Bank of India is to push customers to migrate to electronic modes of payment. Electronic modes of payment apart from being cost-effective shorten the collection cycle also.
The capping of charges and directive that ‘No additional charges such as courier charges should be levied’ will force Bankers, to migrate customers to Electronic modes of payment. As otherwise Bankers will have to shell out the expenses incurred above the ceiling. For example, the minimum courier cost intra-state is Rs15/-, inter-state is Rs.25/-, Speed Post Rs.35/-. Banks have no control over the courier charges. There are also issues like Cheques getting ‘lost in transit/misplaced/late-delivery’.
Further to condense the Collection Cycle, Reserve Bank of India has advised Banks to reduce the clearing cycle and to promote electronic modes of payment, the drawee banks should use electronic modes like RTGS / NEFT, wherever available, to remit proceeds to the collecting bank branch. This is like killing two targets with one stone!
Reserve Bank of India has advised Banks to make increased use of Speed Clearing and National Clearing facilities for providing efficient service.
National Clearing Service: Cheques drawn on metros and notified centers can be collected through this service.
"Speed clearing" leverages the technology of core or centralized banking solution (CBS) of banks which enables them to access details of all account holders from any branch.
In short, Reserve Bank of India vide it above circular, puts the onus on Banks to
01) Persuade customers to move to EPayments.
02) Leverage technology to be customer-centric.
03) Conserve Paper, i.e be environment friendly.
By now, all Banks must have shifted to the above Charges, and the impact on the Banks Balance Sheet, will be known on publication of March 2009, Financial Data.
In brief, Outstation cheque collection Charges have to be:
a) Up to Rs. 10,000 not exceeding Rs. 50 per instrument
Rs. 10,000 to Rs. 1,00,000 not exceeding Rs. 100 per instrument
Rs.1,00,001 and above not exceeding Rs. 150 per instrument
More can be known at
http://www.indianexpress.com/news/Reserve Bank of Indiai-plans-to-cap-outstation-cheque-collection-charges/360377/
The main reason for capping the charges by Reserve Bank of India is to push customers to migrate to electronic modes of payment. Electronic modes of payment apart from being cost-effective shorten the collection cycle also.
The capping of charges and directive that ‘No additional charges such as courier charges should be levied’ will force Bankers, to migrate customers to Electronic modes of payment. As otherwise Bankers will have to shell out the expenses incurred above the ceiling. For example, the minimum courier cost intra-state is Rs15/-, inter-state is Rs.25/-, Speed Post Rs.35/-. Banks have no control over the courier charges. There are also issues like Cheques getting ‘lost in transit/misplaced/late-delivery’.
Further to condense the Collection Cycle, Reserve Bank of India has advised Banks to reduce the clearing cycle and to promote electronic modes of payment, the drawee banks should use electronic modes like RTGS / NEFT, wherever available, to remit proceeds to the collecting bank branch. This is like killing two targets with one stone!
Reserve Bank of India has advised Banks to make increased use of Speed Clearing and National Clearing facilities for providing efficient service.
National Clearing Service: Cheques drawn on metros and notified centers can be collected through this service.
"Speed clearing" leverages the technology of core or centralized banking solution (CBS) of banks which enables them to access details of all account holders from any branch.
In short, Reserve Bank of India vide it above circular, puts the onus on Banks to
01) Persuade customers to move to EPayments.
02) Leverage technology to be customer-centric.
03) Conserve Paper, i.e be environment friendly.
By now, all Banks must have shifted to the above Charges, and the impact on the Banks Balance Sheet, will be known on publication of March 2009, Financial Data.
Wednesday, November 5, 2008
EPayment-A Daring Step by Reserve Bank of India
Reserve Bank of India, in the second half of 2008, has taken up a daring decision to decrease transaction charges, to encourage the usage of EPayment in India. This was followed up by a Notification on 08/10/2008, to Banks to implement the Charges, with immediate effect.
The shift is designed at popularizing electronic payments and discouraging higher charges levied by banks on customers.
Loyalty begins with the right customers, and Reserve Bank of India, has taken up the initiative to attract customers to EPayment.
In brief,
Inward electronic transaction facilities offered by banks will now be free of cost.
Outward
RTGS*
1-5 lakh Rs.25
5 lakh and above not exceeding Rs 50
NEFT*
Up to 1 lakh not exceeding Rs 5
1 lakh and above not exceeding Rs 25
The emphasis is on IMMEDIATE EFFECT. It means Reserve Bank of India, has studied in-depth, the IT Software Applications/Core Banking Solutions of Banks in India, concluded that only minor modifications are required in the same, for implementation of the new EPayment Charges. This reflects the professionalism of Reserve Bank of India, and its willingness to go the extra-mile, for customer-centricity.
Steps are being taken to widen the coverage, both in terms of banks and branches.
The shift is designed at popularizing electronic payments and discouraging higher charges levied by banks on customers.
Loyalty begins with the right customers, and Reserve Bank of India, has taken up the initiative to attract customers to EPayment.
In brief,
Inward electronic transaction facilities offered by banks will now be free of cost.
Outward
RTGS*
1-5 lakh Rs.25
5 lakh and above not exceeding Rs 50
NEFT*
Up to 1 lakh not exceeding Rs 5
1 lakh and above not exceeding Rs 25
The emphasis is on IMMEDIATE EFFECT. It means Reserve Bank of India, has studied in-depth, the IT Software Applications/Core Banking Solutions of Banks in India, concluded that only minor modifications are required in the same, for implementation of the new EPayment Charges. This reflects the professionalism of Reserve Bank of India, and its willingness to go the extra-mile, for customer-centricity.
Steps are being taken to widen the coverage, both in terms of banks and branches.
Thursday, October 23, 2008
Kapil Dev-Help Him Realise His Dream
Dear All,
This is my small attempt to realise the Dream of Kapil Dev_ i.e to Help him in the task of finding new Talent for Indian Cricket.
If you feel, Kapil Dev, is doing the right thing by being part of ICL, please email to both the organizations(reply option can be utilised) i.e., ICL and BCCI to come together for the good of CRICKET
The email Id's are
response@iclonline.in, questions@bcci.tv
Some Information to facilitate, to arrive at an assessment.
I am only fascinated only with KAPIL DEV', and nothing else.
Extraced from Wikipedia regarding ICL
Quote:-
Extraced from Wikipedia regarding Kapil Dev
Quote:-
In May 2007, Kapil Dev joined the upstart Indian Cricket League (ICL) floated by Zee TV as the chairman of executive board and defended his decision as complimenting BCCI's structure rather than opposing it - "We are not looking to create a rival team but helping the Indian board to find more talent". In June 2007, BCCI responded by revoking the pension for all players who have joined ICL, including Kapil. on 21 August 2007, Kapil Dev was removed from the chairmanship of the National Cricket Academy, a day after he addressed a formal press conference of the new Indian Cricket League.
Unquote
A Closing quote from my favourite author:
Ambrose Bierce [pseudonym Grile Dod] (1842-c1914), American journalist and author wrote The Devil's Dictionary (1906);
CIRCUS, n. A place where horses, ponies and elephants are permitted to see men, women and children acting the fool.
This is my small attempt to realise the Dream of Kapil Dev_ i.e to Help him in the task of finding new Talent for Indian Cricket.
If you feel, Kapil Dev, is doing the right thing by being part of ICL, please email to both the organizations(reply option can be utilised) i.e., ICL and BCCI to come together for the good of CRICKET
The email Id's are
response@iclonline.in, questions@bcci.tv
Some Information to facilitate, to arrive at an assessment.
I am only fascinated only with KAPIL DEV', and nothing else.
Extraced from Wikipedia regarding ICL
Quote:-
Transparency Issues
Independent analysts have difficulty gauging the financial viability of the ICL due to the lack of transparency of the league's operations. Terms of contracts are rarely known and advertising revenue from match telecasts — considered to be the driver of all revenue — have never been disclosed. Because they are unsanctioned by the ICC, they do not have access to the best facilities across the whole country or access to the best players which limits their ability to capture high gate revenues. This lack of transparency leads to questions regarding the overall viability of the ICL's business model.
Unquote:Extraced from Wikipedia regarding Kapil Dev
Quote:-
In May 2007, Kapil Dev joined the upstart Indian Cricket League (ICL) floated by Zee TV as the chairman of executive board and defended his decision as complimenting BCCI's structure rather than opposing it - "We are not looking to create a rival team but helping the Indian board to find more talent". In June 2007, BCCI responded by revoking the pension for all players who have joined ICL, including Kapil. on 21 August 2007, Kapil Dev was removed from the chairmanship of the National Cricket Academy, a day after he addressed a formal press conference of the new Indian Cricket League.
Unquote
A Closing quote from my favourite author:
Ambrose Bierce [pseudonym Grile Dod] (1842-c1914), American journalist and author wrote The Devil's Dictionary (1906);
CIRCUS, n. A place where horses, ponies and elephants are permitted to see men, women and children acting the fool.
Thursday, October 9, 2008
EPayments-A brief introduction.
To me Epayment means, movement of funds from one bank account to another bank account, electronically, without the cheque or minimal human intervention.
Common types of Epayments currently in India are: Credit Card, Debit Card, Epayment of Government Taxes, Electronic Clearing Services(ECS-Debit), Electronic Clearing Services(ECS-Credit), RTGS and NEFT.
Further, this can be classified into two types: Push-Amount is credited to the beneficary's account by a specfic action of the Remitter, each time. Examples are Credit Card, Debit Card, Epayment of Government Taxes, ECS-Credit, RTGS and NEFT.
Pull-Amount is debited from the Remitter and credited to the beneficary, basing on a Standing Instruction. Example is ECS-Debit.
Of the above two, the PUSH type is secure from the remitter's views, whereas the beneficaries viz EMI Recovery, Utility Bills prefer PULL type. Hence, customers should be inclined towards PUSH, rather than PULL
The major advantage of Epayments is the flexibility to the customers, apart from cost-saving to customers and financial instituions.
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