Recognising the importance of ensuring the safety, security of the payment systems, the Reserve Bank of India (RBI)  has put in place three modes of electronic payments i.e. Real time Gross Settlement (RTGS) System, National Electronic Fund Transfer (NEFT) System and Electronic Clearing Service (ECS). Payments by these modes have been steadily growing in the last few years. An internal Working Group set up by the Reserve Bank to examine the various issues related to migration from paper-based systems to electronic systems recommended a phased approach of encouraging, monitoring and mandating for this migration. The Reserve Bank has been using the approach of encouraging and monitoring resulting in almost 40,000 bank branches spanning over 9773 centres being covered by the RTGS and NEFT systems.

A study conducted by the Reserve Bank revealed that during a three month period about 2,100 cheques each valued at Rs.1 crore and above were processed in the clearing houses in the four metros. It is proposed that with effect from     April 1, 2008 all payment transactions of Rs. 1 crore and above between RBI regulated entities i.e. banks, primary dealers and NBFCs as well as in RBI regulated markets i.e. money market, Government Securities market and foreign exchange market may be mandated to be undertaken through electronic mode only. This move will not only reduce risk from moving large paper-based value retail payments to safer electronic modes, but will also bring greater efficiency and customer convenience to the payment systems.

RBI has accordingly prepared an Approach paper and placed the same on its website today and the same is open for public comments up to March 3, 2008. Comments may be sent by email or faxed to 022- 22659566 or letters addressed to the Chief General Manager (DPSS), Reserve Bank of India, Central Office, Mumbai-400001.

Ajit Prasad
Manager

Press Release : 2007-2008/1094