RBI to add 5,000 bank branches on RTGS by June

The Reserve Bank of India (RBI) plans to bring up to 20,000 branches under Real Time Gross Settlement (RTGS) coverage by June 2006. Currently, 15,000 branches, constituting 85 per cent of the banking business, are covered under RTGS.

Speaking at the CII Banking Tech Summit, RBI executive director, R B Barman said: "The central bank is also exploring the option of grid system, wherein branches that aren't connected can also work offline, through one nodal branch. The modalities for this system are currently being worked out."

Barman said that there are around 35,000 rural branches, which account for about 15 per cent of business volumes, in the banking system. The RBI has already assigned a unique identification code for branches of every bank.

Barman informed that the next step ahead would involve banks assigning such codes for each of their customers as well, which will enable banks to deploy the straight-through-processing (STP) mechanism.

The RBI has, till now, spent Rs 75 crore in the deployment of the RTGS network. Barman opined that there is a need to compute savings that have been accrued because of the technology, for which the central bank might undertake a study to examine how the technology has effected the profitability of the banking system vis-a-vis expenditure on technology.

Sources estimate that globally, economies have managed to save up to 1 per cent of their gross domestic product through payment system initiatives.

Also present on the occasion, C-Sam Inc, CEO and founder, Sam Pitroda said that over the next five years, mobile banking is going to be a household phenomenon.

Pitroda pointed out that with the Indian mobile phone market set to increase to 200 million, there would be more phone users than bank accounts.

Larsen & Toubro CFO Y M Deosthalee pointed out that there is a need for increased integration of banking services between domestic players and banks based overseas, in the light of heightened activity in the mergers and acquisitions (M&A) space.