Previous

Part - VI

We have come across companies using extensively the technology in payment of dividends and interest warrants to their shareholder/ debenture holders, payment to suppliers and employees in the form of ECC (Electronic Clearing Credits).

Internet Banking

While a start has been made in the Internet banking in India, the number of transactions through this mode is extremely negligible (less than 1%). A study group appointed by the RBI has suggested that for Internet banking, there should be robust system keeping a log of all network activities and analyzing the same. RBI has gone on to suggest various technical features essential for having such a robust system. This should be in place within the next 2 years. Hopefully, we shall see a surge/splurge in the usage from 1% to at least 10% in the next couple of years.

Real Time Gross Settlement (RTGS)

RTGS is a payment system in which processing and settlement takes place in real-time (continuously). In this system, funds would flow freely from one market to another leading to better integration of the Domestic Financial Markets among themselves, and with International Financial Markets as well. RTGS, as a settlement process will minimize settlement risks by settling individual payments in real time in the books of Account held by the RBI. Mr Vepa Kamesam, Deputy Governor of RBI said "RTGS will be a mode for large value Inter-Bank settlement, to be widely used, for enhancing risk control measures, for faster and efficient settlement of liabilities for better customer services for the ultimate users in the value chain. RTGS would eliminate the time lag between the debit to an account of customer and its corresponding credit to another customer in a different bank. RTGS requires implementation of a 2 Level Gateway- one at the individual bank level and the other at the RBI level.

Safe Keeping Charges for Deposits???

Looking at the southward movement of interest rates on deposits (From 11% it has nosedived to 5.5% in the past 18 months). We expect, after a couple of years, that some of the banks may refuse to accept 'deposits carrying interest'. On the contrary, they may levy charges for the safe keeping, if at all they accept. Savings Bank accounts may cease to carry interest as in the case of Current Accounts, only facilitating transactions of the customers.

Next

* Contributed by -
Aditya Khemani, PGDM - II Year,
Tuhina Singh, PGDM - I Year,
IIM Lucknow.