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 The National Payment Council (NPC) with representation from the industry is an important part of this process.

 The Reserve Bank has also been making sustained efforts to implement an integrated and efficient payment system through:

  1. integration of financial entities through the INFINET;
  2. encouraging retail electronic mode of payment including implementation of electronic funds transfer (EFT) system;
  3. establishing the negotiated dealing system (NDS) and
  4. introduction of real time gross settlement (RTGS) system.
 In addition, the funds transfer module of centralised fund management system (CFMS) would be implemented by December 2003.

 The national settlement system (NSS) is expected to be operational by June 2004 which would integrate the segmented clearing and settlement infrastructure in the country and enable more effective funds management by banks. Further measures in this direction are given below:

 (a) Implementation of RTGS

 As indicated in the annual policy Statement of April 2003, RBI has commenced implementation of a RTGS system in a phased manner.

 As a first stage, a demonstrable version of the RTGS system was implemented in June 2003, and hands-on practice was given to the officials of 104 banks.

 In the next stage, after acceptance testing and trial run, the standalone RTGS system is scheduled to be operationalised by January 2004. In the final stage, a fully functional RTGS system is expected to be made operational by June 2004.

 This system would be fully integrated with the integrated accounting system of RBI. Banks and PDs are required to ensure complete readiness in terms of infrastructure, systems and procedures, and adequate trained manpower to effectively participate in the RTGS system.

 As RTGS services are to be offered by banks through their branch network, it is essential that banks should put in place necessary connectivity between their branches and the payment system gateway through which banks will interact with the RTGS system.

 (b) Intra-day Liquidity under RTGS

 With the commencement of RTGS, the likely increase in requirement of intra-day funds would necessitate provision of intra-day liquidity (IDL) to participants for a smooth and timely settlement process.

 The Reserve Bank would be providing collateralised intra-day liquidity support to the participants.

 In this context, RBI had a number of consultations with market participants in respect of criteria for fixation of limits for IDL, eligible collateral and other related issues.

 In order to facilitate smooth transition to RTGS environment, market participants are advised to devise strategies for efficient cash flow management.


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