Hdfc Bank Unveils Electronic Payment System

HDFC Bank has launched a cash management system for the capital market segment -- electronic payment interface (EPI) -- to help cut down the settlement time for both securities and cash.

The product integrates transactions both online (conducted over the internet) and offline, providing brokers and clients easy transfer of funds and securities with just the click of a button. With T+3 settlement already in place and T+2 and T+1 expected to be a reality in another two years, the product is expected to prove useful for the shorter settlement periods.

EPI was launched by the bank just a couple of months back. HDFC Bank's country head (transactional banking and operations) H Srikrishnan said that around 120 top brokerages (operating both in the offline and online segments) had signed up for the new system. "The product is an extension of our cash management system to the capital markets," he said.

 

"The broker will not have to issue any cheques or any instruction slips to transfer the shares. The bank has set up terminals in the brokers' offices. The brokers will transfer the information electronically to the bank's system. As the accounts are online they will be immediately credited," he said.

In order to be eligible to utilise the product, the investors and the market participants have to be customers of the bank. Srikrishnan added that irrespective of how the trade happens -- whether online or offline, the transaction will go through the system. The bank will charge the brokers a one time implementation fee and an annual maintenance fee.

The bank is also a clearing house to all the major stock exchanges in the country. According to Srikrishnan, the bank clears around 65 per cent of the National Stock Exchange volumes and around 50 per cent of the Bombay Stock Exchange volumes. "We have increased our market share in both the exchanges," he said.

The Reserve Bank of India (RBI) has limited banks' exposure to the capital markets at 5 per cent of their advances. HDFC Bank has an exposure of around 4.5 to 4.7 per cent of the advances to the capital markets. The capital market business helps contributes to the lowering of the cost of the deposits due to the float funds available.

The bank has a customer base of more than 900 of the top capital market participants in the country, including foreign institutional brokers, large Indian players, brokers and also regional players.