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PAYMENT & SETTLEMENT
SYSTEM
PAYMENT & SETTLEMENT
SYSTEM
EFFORTS:
NIRAJ AGARWALA
JESIM
PRANJIB GOSWAMI
KALYAN KUMAR MEDHI
NA1
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Slide 1
NA1 Payment and Settlement system
For GCCCMS 3rd SemesterNiraj Agarwala, 9/1/2010
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Payment and Settlement Act ,2007
EXTENT : Whole of IndiaOBJECTIVE : To provide for the regulation and supervision of
payment systems in India
Came to force on 12 Aug, 2008
Powers vested to RBI
Regulations-
a) The Board for Regulation and Supervision of Payment and
Settlement Systems Regulation, 2008
b) The Payment and Settlement Systems Regulations, 2008
Covers matters like form of application for authorization forcommencing/ carrying on a payment system and grant of
authorization, payment instructions and determination of
standards of payment systems, furnishing of
returns/documents/other information, furnishing of accounts
and balance sheets by system provider etc
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Designated Authorities1. RBI
2. Board for Regulation and Supervision of
Payment and Settlement Systems.
Governor, RBI, Chairperson of the Board;
Deputy Governors, RBI, out of whom the Deputy
Governor who is in-charge of the Payment and
Settlement Systems, shall be the Vice-Chairperson of
the Board; Not exceeding three Directors from the Central Board
of the RBI to be nominated by the Governor.
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MEANING:MEANING:
PAYMENT SYSTEM- is a mechanism that
facilitates transfer of value between a payer
and a beneficiaryby which the payer
discharges the payment obligations to thebeneficiary.
SETTLEMENT- means the settlement of
payment instructions received and theseinclude settlement of securities, foreign
exchange or derivatives or other transactions.
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WAYS OF PAYMENTSWAYS OF PAYMENTS::
CASH CHEQUE
DRAFTS CREDIT CARDS & DEBIT CARDS ELECTRONIC PAYMENTS-
ECS
RTGSNEFT
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Cheque:Cheque:Sec 6 of Negotiable Instruments Act,
1881
Bearer & A/C Payee
Crossing- a) Generalb) Special
c) Restrictive
d) Double
Drafts:
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Cheque/Drafts/Payorder Process:Cheque/Drafts/Payorder Process:
ClearingHouse
Bank 1
Mr ABeneficiary
Bank 2
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Credit Card & Debit CardCredit Card & Debit Card
Credit Card:Credit Card:
PostpaidPostpaid
Purchase & WithdrawalPurchase & Withdrawal--7:3(approx)7:3(approx)
Bill Date & Due DateBill Date & Due DateInterest (3% pm) after due dateInterest (3% pm) after due date
Issued to bank employees & customers ofIssued to bank employees & customers of
good reputation.good reputation.
Debit Card:
Prepaid
No ratio & dates
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Debit Card & Credit Card Process:Debit Card & Credit Card Process:
of ellersa
ofCustomers
a
Customer A/C
Dr.
ellers A/C
Cr.
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EC
S:EC
S:Electronic Clearance ServiceRepetitive Transactions
Automatically debited on due date
Minimal charge
ECS Types- Debit & Credit
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Real Time Gross Settlement
System(RTGS)
Real time gross settlement systems (RTGS) are afunds transfer mechanism where transfer of money
takes place from one bank to another on a "realtime" and on "gross" basis.
Settlement in "real time" means payment transactionis not subjected to any waiting period. Thetransactions are settled as soon as they are
processed. "Gross settlement" means the transaction is settled
on one to one basis without bunching with any othertransaction. Once processed, payments are final andirrevocable.
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RTGS is a large value (minimum value of transactionshould be Rs. 1,00,000) funds transfer system
whereby financial intermediaries can settle interbank
transfers for their own account as well as for their
customers. Customers can access the RTGS facility between
9 am to 4:30 pm on week days and 9 am to 12 noon
on Saturdays.
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Evolution of RTGS The system went live on 26 March with State Bank
of India, HDFC Bank and Standard Chartered Bank.
The Reserve Bank of India expected 120 scheduledcommercial banks and primary dealers to becomepart of the real time gross settlement system(RTGS) by June 2004.
On 11 May 2004, 19 more banks joined RBI's RTGSbringing the total to 23. This include Bank of Baroda,
Punjab National Bank, Canara Bank, Union Bank ofIndia, Indian Overseas Bank, Central Bank of India,Dena Bank, BNP Paribas, IndusInd Bank, INGVysya Bank
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PROCESS:SENDING BANK
PAYMENT MESSAGE
CENTRAL BANK
PROCESSING OF MESSAGE
RECEIVING BANK
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National Electronic Fund Transfer
Launched on Oct, 2005
NEFT is a nation-wide electronic funds transfer
system, which facilitates transfer of funds from any
bank branch to any other bank branch. This is asimple, secure, safe and fastest mode of funds
transfer. This is an ideal mode of funds transfer for
Retail remittances.
Presently, Over 45000 bank branches are enabled forsending and receiving NEFT messages in India. There
is no amount ceiling under this scheme and as such
the customers can remit any amount.
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There are six settlement windows for NEFT at 9.30,10.30, 12.00, 13.00, 15.00 and 16.00 hours on
weekdays and 9.30, 10.30, and 12.00 hours on
Saturdays.
The money will be credited to the beneficiarysaccount on the same day or at the most next day in
case the message is sent during the last batch of
settlement.
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Request for NEFT by bank customer
Data Entry at the Sending Bank Branch
Processing /Data Upload at Sending NEFT Service Centre
Transmission/Submission of NEFT message to the NEFT centre
Processing & transmission of NEFT message to the beneficiary banks
Data validation at receiving NEFT Service Centre
Payment to beneficiary
NEFT - PROCESS FLOW
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Request for NEFT by bank customer
A bank customer (i.e. sender or originator) desirousof remitting funds under the system shall submit an"NEFT Application Form" (to be designed by theparticipating bank) authorizing the sending bank todebit the sender's account and transfer funds to the
beneficiary as specified in the NEFT ApplicationForm. The application could be submitted either inphysical form or electronically.
The payment instruction given by the customer shallbe in compliance with the provisions. Banks shallensure that the customers are made aware of therights and obligations of participants in NEFTsystem.
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A transaction within the NEFT system will be said tohave been initiated when the sending bank accepts
a payment instruction issued by the sender.
If in a single payment instruction, the sender directs
payments to several beneficiaries, each paymentdirection shall be treated as a separate payment
instruction.
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Requirements:
1. Amount to be remitted
2. The account number which is to be debited
3. Name of the beneficiary bank
4. Name of the beneficiary customer5. Account number of the beneficiary
customer
6. Sender to receiver information, if any
7. The IFSC Number of the receiving branch
(number available with branch)
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REJECTION:
i) the customer has not placed funds at
the disposal of the sending bank or
funds placed is not adequate to cover
the sum to be remitted and the servicecharge; or
ii) the beneficiary details given in the
NEFT Application form are notadequate to identify beneficiary by the
beneficiary bank.
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RTGS & NEFT PROCESS:RTGS & NEFT PROCESS:
HOBANK B
HOBANK A
BANK A
CUSTOMER1
Beneficiary
BANK B
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DIFFERENCE B/W RTGS & NEFT
NEFT RTGS
NEFT are electronic fund
transfer modes that operate
on a Deferred NetSettlement (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.
In RTGS, transactions are
processed continuously
throughout the RTGSbusiness hours.
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PROCESSING CHARGESAmount Service Charge
NEFT Below Rs. 1 Lakh Rs. 5
Rs. 1 Lakh & above Rs. 25
RTGS Below Rs. 5 Lakh Rs. 25
Rs. 5 Lakh & above Rs. 50
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Complaints : Whom to Approach?Complaints : Whom to Approach?
Bank HO/ Branch
RBI Customer Service:The Chief General Manager,
Reserve Bank of India,
Customer Service Department,
1st Floor, Amar Building, Fort,
Mumbai - 400001
or send and email.
Banking Ombudsman
RBI appellate authority( Deputy Governor)
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CONCLUSION
The objective of any Payment & Settlement systemregime is the establishment ofsafe, secure, soundand efficient payment and settlement systems.
Safety will relate to addressing risk, so as to make the
systems risk free or with minimal risk Security will address the issues relating to
confidence, with specific reference to the users ofthese systems
Soundness will be aimed at ensuring that the systemsare built on strong edifices and that they stand the testof time
Efficiency will represent the measures aimed atefficiencies in terms of costs so as to provide optimal
and cost effective solutions.
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Thank You !
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