India was once a byword for paper-based payments. But Indian banks are making rapid progress in switching from paper-based transactions to electronic means of payment, including Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT), says the CFO of Banknet India.
The volume and value of card and electronic based payments in India have more than doubled in 2006 from the previous year. “If managed through a clear, consistent strategy, electronic payment products can be a real source of competitive advantage and profitability for banks”, according to Anurag Khanna, CEO, Banknet India.
Extension of electronic funds transfer (EFT) facility by the banks has changed the money transfer scene in India. After the launch of an RTGS system by the Reserve Bank of India (RBI) in March 2004, corporates and other bank customers were able to transfer funds to designated branches instantaneously.
The coverage of the RTGS system has increased significantly since. By 23 October 2006, RTGS connectivity was available in 24,425 branches. The number of transactions using the system has exceeded 300,000 per month.
Lower value payments are settled through National Electronic Fund Transfer (NEFT), which the RBI is currently promoting. The NEFT system went live on 1 November 2005 and is now available at 9,096 branches.
The implementation of Cheque Truncation System (CTS) is another RBI-led project to introduce paper-less payment systems. The pilot project for CTS is expected to be implemented in New Delhi by end-December 2006.
Banknet India’s Third Annual Conference on Payment Systems in Banks will bring together prominent speakers from Reserve Bank of India and major banks on 10 January 2007 at Mumbai to discuss ACH, ECS, RTGS, NEFT, and CTS.