RBI to upgrade high-value fund transfer system

The Reserve Bank of India (RBI) plans to upgrade its high-value online fund transfer system RTGS to enable handling of up to 50 lakh transactions a day and incorporate various new facilities for the bank customers.

The RTGS (Real Time Gross Settlement) system facilitates online transfer of high-value funds between bank customers of different banks on real-time basis and currently handles about three lakh transactions per day.

Ever since the RBI started RTGS system in March 2004, it has been highly successful and a preferred mode of inter-bank transfer of large-value funds by the customers of various banks, as funds get transferred almost instantaneously.

Keeping in view of the ever-rising usage of the system, the central bank has decided to replace the existing RTGS system with a Next-Generation Real Time Gross Settlement (NG-RTGS) system, a senior official said.

The new system would be implemented for the entire banking and financial sector of the country and the exercise of replacing the existing RTGS system would be executed in various phases.

Currently, RTGS system, under which funds worth Rs 2 lakh or more can be transferred instantaneously, is handling an average of 3 lakh transactions per day, up from only 4,000 transactions when it was launched in 2004.

The RBI expects 7 lakh transaction per day through RTGS very soon, 25 lakh transactions per day in five years and then about 50 lakh transactions per day in next 10 years.

To take care of the growing popularity of the system and a need for more robust fund-transfer system in an expanding economy, the RBI has decided to upgrade the existing system, the official said.

The new system would have initial capability of handling 7-12 lakh transactions a day and an upgradation potential of 25-50 lakh transactions every day, the official added.

Besides, the new system would also incorporate various new functions for the benefit of bank customers.

The NG-RTGS system would have advanced liquidity management features and queue management techniques and would allow the bank customers to initiate fund transfers for future dates and get information about the status of their transactions through SMS alerts.

As part of the project, the RBI has already sought expressions of interest from potential technology vendors and system integrators for implementing the new system.

The decision to upgrade the existing system was taken after a Working Group, comprising of representatives from RBI and select banks such as SBI, Punjab National Bank, ICICI Bank and HDFC Bank, submitted its report in August 2010 for implementation of the NG-RTGS.

The entire implementation of the new system is expected to be completed within two years.