The Reserve Bank of India on Tuesday said it will set up an institution at the national level to own and operate all retail payment systems of the country.
In its payment systems in India -- Vision 2005-08, RBI said it will also establish a national settlement system through which the clearing houses/clearing organisations can settle the net position of the participating banks at the national level.
To start with, all clearing settlements from four centres (Mumbai, New Delhi, Kolkata and Chennai) would be settled through National Settlement System by December 2005.
Coverage of all major clearing centers -- the 40 MICR clearing centers -- would be completed by December 2006. Towards this, RBI will take steps to build a sound legal base for payments systems.
These include enactment of payment and settlement systems act, framing of regulations for authorised payment and settlement systems, finalisation of electronic funds transfer regulations and drafting regulations for electronic clearing system (debit clearing).
To mitigate risks in payment systems, RBI plans to migrate inter-bank transactions at all places to Real Time Gross Settlement system and make high value clearing systems secured netting systems by introduction of guarantee funds.
The central bank will also implement national settlement system for posting the net position of the clearing participants in all clearing houses in the country.
And to address operational and legal risks, it will introduce digital signatures for enhanced security of messages, encourage credit transfers in electronic mode and provide for high availability of all systems.
RBI will strive to have every cheque of MICR standards and make all payment and settlement services to be available on a national level -- National ECS, National EFT and National CTS.
It will rationalise clearing operations by setting up new clearing houses, expansion of geographical jurisdiction of the clearing houses and merger and amalgamation of clearing houses.
