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Poornima Mohandas

Banks seem to be of the opinion that the Real Time Gross Settlement System platform set up by the RBI may not be viable for the retail customer.

Mumbai , Dec. 26

COME January, banks will clear money transactions instantly irrespective of the amount, albeit at a fee.

However, banks seem to be of the opinion that the new technology platform set up by the RBI — RTGS (Real Time Gross Settlement System) may not be viable for the retail customer.

"We shall see how the institutional customer accepts RTGS, later we shall think of the retail customer. There is also an issue of lack of awareness among the retail public. It will be a minimum of six months before they can access it,' said a senior bank official.

The real time gross settlement platform for clearing and settlement of funds is currently being tested by the RBI amongst four banks.

"It will be implemented across banks by third week of January for fast clearing and settlement of funds of both customer and inter-bank transactions,'' said a senior RBI official. This dispels the popular understanding in banking circles that the first phase of RTGS would involve only treasury transactions.

According to the official, "There will be no floor or ceiling for routing transactions through RTGS. In case a father wants to send his son his examination fees immediately, it will be possible online and instantaneously from January onwards even if it is a small amount. The customer will have the choice whether to make use of RTGS or bear with one days' delay through the special EFT (electronic fund transfer) or go for the age-old demand draft.''

Earlier, there had been much debate as to whether only high-value transactions should be routed through RTGS. But the apex bank has taken a decision to make it accessible to all retail customers.

Whether customer transactions are routed through RTGS or not depends on the preparedness of the individual banks, since only computerised and networked branches can be attached to the RTGS network. Moreover, banks also need to come out with the right pricing and design for various products involving fund transfers.

Currently, most banks are only concentrating on the re-pricing of the big-ticket corporate transactions.

To begin with, well over 128 cities are to be connected to the RTGS.

Banks will submit the final list to RBI enumerating the locations and branches that will be connected through RTGS by December 31, said the official.

The transfer charges/service charges involved could be steep which each bank will decide individually, inform RBI and then make public.

In the second phase of implementation of RTGS, i.e., by June 2004, net settlement of transactions of the Clearing Corporation of India, the stock market and also the internal RBI accounting will take place, explained the official.

He added that there would be no parallel run of the existing clearing system and RTGS since that would lead to double crediting and debiting of accounts but instead there would be some initial mock trading sessions with some standard sets of examples.

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