Banking Awareness Inwards Unproblematic Linguistic Communication – Lesson 22

Dear Gr8 Ambitionists, inward our previous Banking Awareness Lesson 21, nosotros induce got learnt close diverse Credit Rating Agencies inward India. In today’s lesson, nosotros shall larn or in addition to thus of import Banking Concepts. Happy Reading 🙂

Banking Awareness 2017 : Important Banking Concepts

CBS (Core Banking Solution)

Core Banking Solution is networking of branches, which enables customers to operate their accounts, in addition to avail banking services from whatever branch of the banking corporation on CBS network from whatever utilisation of country. Even the client is no to a greater extent than the client of a branch. He becomes the Banks Customer.

CBS inward Republic of Republic of India :

The inaugural was taken yesteryear the banks on the footing of “First Rangaranjan Committee Report” on banking corporation computerization submitted inward the yr 1984.

Syndicate Bank was the get-go alongside the Public Sector Banks to implement Core Banking. First CBS Branch of Syndicate Bank was Jayanagar branch inward Bangalore.

Important Note : Full shape of “CORE” inward Core Banking Solution is Centralized Online Real-time Exchange

Payment in addition to Settlement System inward India

This organisation regulated yesteryear the Payment & Settlement Systems Act, 2007 (PSS Act), legislated inward Dec 2007. The (PSS) is controlled yesteryear BPSS (Board of Regulation of Payment in addition to Settlement Systems).

Payments are an indispensable utilisation of our daily transactions, live it a consumer to a business, a concern to a client or a concern to business. Thus it is mandatory that the payment systems of the province are “safe, secure, sound, efficient, accessible & authorize” every bit stated yesteryear the mission tilt of the RBI publication on Payment Systems inward India.

RIGS (Real Time Gross Settlement) :  

  1. Started inward March 2004 
  2. It is defined every bit the continuous short town of funds transfers individually on an lodge yesteryear lodge footing (without netting). 
  3. The minimum amount is Rs. 2 lakh to live transferred in addition to no upper limit. 
  4. Services charges for RTGS Transaction :
    1. Inward Transaction : Free, no accuse to live levied. 
    2. Outward Transaction : Rs. 2 lakh to Rs. five lakh : Rs. 30.00 + service Tax per transaction Above five Lakh : Rs. 55.00 + service taxation per transaction 
  5. Record preservation : 10 years
  6. Settlement Cycles : 2 Hour (maximum)

NEFT (National Electronic Fund Transfer) :  

  1. Started inward Nov. 2005
  2. NEFT is an electronic fund transfer organisation that operates on a Deferred Net Settlement (DNS) footing which settles transactions inward batches
  3. No minimum in addition to maximum bound for transaction. 
  4. Settlement menstruum : Batch + 2 hours 
  5. Service charges for NEFT transaction : 
    • upto Rs. 10,000 
      • = Rs .2.5 per transaction + service tax 
      • > Rs. 10,000 to Rs. 1 Lac 
      • = Rs. five per transaction + service tax 
      • > Rs. 1 Lac to Rs. 2 Lac 
      • = xv Rs. per transaction + service tax 
      • > Rs. 2 Lac 
      • = Rs. 25 per transaction + service taxation

Note :

  • Leading Public Sector Bank, State Bank of Indore has travel yesteryear away the first banking corporation inward the province to innovate the facility of NEFT in all its branches. 
  • Karnataka-based Corporation banking corporation has launched National Electronic Funds Transfer (NEFT) through ATMs, the get-go province run banking corporation to produce so.
  • Maximum coin tin sack live remitted to Nepal yesteryear NEFT is Rs. 50,000. 

EFT (Electronic Fund Transfer) :  

EFT is the electronic transfer of coin from i banking corporation concern human relationship to another, either inside a unmarried fiscal establishment on across multiple institution, through figurer based systems in addition to without the similar a shot intervention of banking corporation staff. 

ECS (Electronic Clearing Service) :  

ECS is an electronic agency of payment/receipt for transactions that are repetitive in addition to periodic inward nature. ECS is used yesteryear institutions for making mass payment of amounts towards distribution of dividend, interest, salary, pension etc. or for mass collection of amounts towards telephone/electricity/water dues, cess/tax. Collection, loan installment repayments, periodic investments inward usual funds, insurance premium etc. 
ECS includes transactions processed nether NACH (National Automated Clearing House) operated yesteryear NPCI (National Payments Corporation of India).

Primarily in that place are ii variants of ECS : ECS Credit & ECS debit. 

ECS Credit :

It is used yesteryear an establishment for affording credit to large reveal of beneficiaries (for instance, employees, investors etc) having accounts with banking corporation branches at diverse locations inside the jurisdiction of ECS pump yesteryear raising a unmarried debit to banking corporation concern human relationship of the user institution. It enables payment of amount towards distribution of dividend, interest, salary, pension, etc. of the user institution. 

ECS Debit :

It is used yesteryear an establishment for raising debits to a large reveal of accounts (for instance, consumers of utility services, borrowers, investors inward usual funds etc) maintained with banking corporation branches at diverse locations inside the jurisdiction of an ECS pump for unproblematic credit to banking corporation concern human relationship of the user institution. ECS debit is useful for payment of telephone, electricity, H2O bills etc that are periodic or repetitive inward nature & payable to the user establishment yesteryear large reveal of customers etc.

NECS (National Electronic Clearing Service) :  

RBI inaugurated the NECS on 29 Sept 2008. The service aims to centralise the ECS performance in addition to select inward uniformity in addition to efficiency to the system.

NECS Credit : It would facilitate multiple credits to beneficiary accounts goal branch at participating pump against a unmarried debit of the concern human relationship of a user with the sponsor bank. 

NECS Debit : It would facilitate multiple debits to goal concern human relationship holders against unmarried credit to user account.

Note : This organisation is based on essence banking solution of fellow member banks.

IMPS (Immediate Payment Services) :

  1. Introduced inward 2010. 
  2. It is a mobile based payment service system. 
  3. In this process, funds are transferred electronically yesteryear cellphone services. The customers utilisation mobile phones every bit a medium for transferring funds.
  4. IMPS is available for 24 x 7 
  5. IMPS is faciliated yesteryear NPCI (National Payments Corporation of India)

IFSC (Indian Financial System Code)

It is an alphanumeric code that uniquely identifies a banking corporation branch particpating inward NEFT system. This is an 11 digit code with the first four alpha-characters representing the bank, 5th grapheme is 0 (zero), the last six characters representing the branch IFSC is used yesteryear the NEFT organisation to position the originating/destination banks/branches in addition to likewise to road the messages appropriately to the concerned banks/branches. 

MICR (Magnetic Ink Character Recognition)

MICR is used mainly yesteryear the banking manufacture to ease the processing in addition to clearance of cheques in addition to other documents. The MICR encoding, called the MICR line, is at the bottom of cheques in addition to other vouchers. MICR induce got ix digits– first 3 digits correspond metropolis code of the banking corporation where banking corporation located in addition to next 3 digits correspond Bank code and final 3 digits correspond Bank branch code

CTS (Cheque Truncation System)

CTS inward India, is a project undertaken yesteryear the RBI inward 2008, for faster clearing of cheques. CTS is based on banking corporation check truncation or online icon based banking corporation check clearing system where banking corporation check images in addition to Magnetic Ink Character Recognition (MICR) information are captured at the collecting banking corporation branch in addition to tansmitted electronically.

The RBI get-go implemented CTS inward National Capital Region, New Delhi from 1 Feb. 2008, with 10 airplane pilot banks in addition to the deadline was ready every bit thirty Apr 2008 for all the banks. This was followed yesteryear launch of CTS inward Chennai on 24 Sept. 2011. After migration from MICR to CTS the traditional MICR based banking corporation check processing was discontinued inward NCR & Chennai. Based on the sense gained in addition to the benefits that would accure to the customers in addition to banks, it was decided to operationalise CTS across the country. Starting 1 August 2013 solely CTS-2010 compliant cheques would live accepted for clearing.

NFS (National Financial Switch)

It was launched on 27 Aug. 2004 yesteryear IDRBT, connecting the ATMs of 3 banks -Corporation Bank, Bank of Baroda & ICICI Bank. NFS is the largest network of shared automated teller machines (ATMs) inward India with the goal of inter – connecting the ATMs inward the province in addition to facilitating convenience banking for the average Indian. It has been run yesteryear the NPCI (National Payments Corporation of India) since 2009.

Note : The get-go ATM inward Republic of Republic of India was setup inward 1987 yesteryear the HSBC (Hong Kong in addition to Shanghai Banking Corporation) inward Mumbai. 

SFMS (Structured Financial Messaging System)

SFMS was launched on Dec 14, 2001 at IDRBT (Institute for Development in addition to Research inward Banking Technology). SFMS is a secure messaging criterion developed to serve every bit a platform for intra-bank in addition to inter-bank applications. It is an Indian Standard Similar to SWIFT (Society for World Wide Interbank Financial Telecommunication) which is the international messaging organisation used for fiscal messaging globally. SFMS tin sack live used for secure communication inside the banking corporation in addition to betwixt the banks. The interbank messaging utilisation is used yesteryear applications similar EFT (Electronic Funds Transfer), RTGS (Real Time Gross Settlement), DVP (Delivery Versus Payments), CFMS (Centralized Funds Management Systems) in addition to others.

Let’s cease this lesson with or in addition to thus important years of the development of Payments System inward India.

  • 1780 – Introduction of cheques in addition to payment-based clearing
  • 1981 – Andhra Bank a primal Bank innovate credit cards                – 
  • 1981 – MICR based banking corporation check processing applied scientific discipline introduced  
  • 1987 – First ATM was ready inward Republic of Republic of India yesteryear HSBC Bank
  • 1994 – ECS for depression value, mass in addition to recurring transactions
  • 1996 – Internet-based banking services introduced yesteryear ICICI Bank
  • 2002 – Mobile banking starts with SMS banking
  • 2004 – 2005 – RTGS in addition to NEFT introduced for inter-bank fund transfer
  • 2008 – Cheque truncated organisation implemented
  • 2010 – Immediate payment service IMPS introduced initially for mobile
  • 2010-2012 – National automated clearing position NACH for interbank high Volume Payments introduced in addition to laid to supercede ECS
  • 2014-2015 – Payments banking corporation in addition to Bharat Bill Pay organisation notified   

That’s all for at nowadays friends. In our adjacent Banking Awareness lesson, nosotros shall larn close Bank Risks & Risk Management. Happy Reading 🙂
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