Tit-Bits Debit Card – Bankers understanding its latent potential.

Debit Card – Bankers understanding its latent potential.

More and more bankers are jumping into the wagon of Debit Cards.

This interest in the Debit Cards should benefit the customers at large.

An interesting article can be accessed at http://www.moneycontrol.com/watchlist1/searchnews.php?call=687474703a2f2f7777772e74686568696e6475627573696e6573736c696e652e636f6d2f323030392f30362f31392f73746f726965732f323030393036313935323435303130302e68746d

Banks are looking at the 1.5-2% transaction cost earned by them on each Debit Card Swipe. Majority of the Merchant Establishments pass on this transaction cost to the customers.

I opine that the Banks should

01) Charge the Transaction cost at a differential rate, than at a flat rate, from all industries, depending on the Current Account Float .

02) Encourage Merchant Establishments NOT to recover this transaction cost from the customers, by educating them of the benefits of the Debit/Credit POS Terminal.

What I find interesting is that Andhra Bank too has jumped into the Debit Cards Wagon, by understanding the lower transaction costs in cashless(ePayments) transactions.

Debit Cards-The innovative Vehicle to propel ePayments

Loan Disbursements through ePayments

Loan Disbursements through ePayments.

Today, Reserve Bank of India, Department of Banking Supervision, has released a Notification on Frauds in borrowal accounts having multiple banking arrangements. The Lr.No. is RBI/2008-09/508 DBS CO.FrMC BC No 8 /23.04.001/2008-09, dt.June 24, 2009.

The complete document can be accessed at

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5051&Mode=0

The basic point is that the in certain cases the borrowers used the accounts maintained at other financing banks to siphon off funds fraudulently diverted from the bank on which the fraud was perpetrated.

The present norm for Loan Disbursements is through Banker’s Cheque/Demand Draft favoring 01) Suppliers of Goods 02) the borrower.

In case of property purchase, the Banker’s Cheque/Demand Draft is favoring the Seller and the Banker’s Cheque/Demand Draft details are entered in the Sale Deed.

A common fraudulent practice is to open benami accounts in banks, and to deposit the Loan Disbursement Instruments in such accounts.

To minimize frauds, I suggest that Loan Disbursements be routed through ePayments mode (RTGS), as the funds will be routed to the beneficiary account directly. The associated risk of manipulating the Loan Disbursement Instruments is also minimized.

Loan Disbursements through ePayments can be encouraged, except where the Loan Disbursement Instrument Number, has to be incorporated in the Legal Document.

As said in my Profile, my only aim is to increase the number of ePayments in India.

Multiply the delight of ePayments

Tit-Bits Benchmark Efficiency for NEFT

Today was just browsing the Internet, and came across this amazing Document on Bench Mark Indicators for Indian Banks, to be adhered on NATIONAL ELECTRONIC FUNDS TRANSFER ( NEFT) SYSTEM

QUOTE

NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) SYSTEM

BENCHMARK INDICATORS OF EFFICIENCY

OBJECTIVES

To document the best practices that the NEFTSC and NEFTCC may adopt to make the operations safe, secure, sound and efficient.

To serve as a tool for the NEFTSC and NEFTCC to make self assessment on efficiency in the NEFT operations.

1. NEFT MEMBERS BANKS:

AT BRANCH LEVEL:

1.1 To ensure that the IFSC code is printed in the cheque books issued to all the customers.

1.2 Display the availability of NEFT facility in that branch prominently.

1.3 Make the application forms for NEFT transactions easily accessible in the branch.

1.4 SFMS enabled branches should login at least once after each settlement of NEFT to check the incoming messages.

1.5 SFMS enabled branches should ensure that the end of batch messages for each batch has been received and reconcile the transactions originated and received by them.

1.6 Returns should be processed in the system only and be sent back in the very next settlement. Return outside the NEFT system should be avoided.

1.7 The return reasons should be marked properly citing the exact reasons.

1.8 Once the customer account is debited, the transactions should leave the branch for the next available settlement.

1.9 Any transactions originated after the last settlement batch should be settled in the first batch of the next working day.

1.10 All the inward transactions should be credited to the customers account within two hours of the settlement.

1.11 Branches to make arrangements to inform customers on the NEFT credits through some means such as SMS alert or e-Mail.

1.12 SFMS enabled branches should have at least three users with smart card in each branch.

1.13 Smart cards PIN numbers should be managed as per the IS policy of the Bank.

1.14 Password based user login to SFMS system, should manage their password as per the IS policy of the Bank.

2. AT NEFT – SERVICE CENTRE.

GENERAL:

2.1 Banks should ensure that the list of branches to be added in NEFT list is properly proliferated at IDRBT and that the requisite details, as per Porforma, are provided to NCC, NPT.

2.2 It is essential that the staff handling NEFT operations is trained to manage the operations. Bank to ensure that second level of trained personnel for operating the NEFT system is also in place.

2.3 Banks should only use the list of live IFSCs available on RBI website for their reference.

2.4 Members Banks should set up Customer Facilitation Centres ( CFCs) for resolution of customer complaints.

2.5 While sending N06 messages the banks should avoid manual feeding of the batch time to ensure that they get attached to the next available batch and do not get rescheduled for the same batch of next day, in case they reach RBI after the cut-off time for the batch.

2.6 Banks should quote the RBI transaction reference numbers and not their internal net-banking numbers while referring the transactions to NEFT Helpdesk at NCC, NPT.

2.7 The member banks should update the contact details of their NEFT

operational and technical staff and communicate the changes, if any, to

NCC, NPT.

NEFT OPERATION:

2.8 Monitor the incoming and out going messages on regular intervals and confirm that all messages are delivered.

2.9 Confirm that the End of Batch message received after each batch, are in conformity with the inward messages received and outward messages sent for that batch from the bank.

2.10 Ensure in coordination with the treasury branch managing RBI account that adequate funds are available for settling each NEFT batch transactions.

2.11 Monitor the failed transactions both at Gateway and NEFT Server on regular basis and reprocess them immediately.

2.12 Ensuring that all the credits are provided to the customers account within the stipulated time and returns are marked within the time schedule.

2.13 Ensuring that branches afford the credits in time, in case the messages are forwarded to the branches.

2.14 No access to NEFT system be permitted to outsiders – only staff / officers of clearing house to be allowed.

NEFT INFRASTRUCTURE:

2.15 The SFMS Gateway and Online branch Server should meet the minimum configuration requirements as per the specifications of IDRBT – and placed in a safe, dust free and access controlled area.

2.16 Administrator password should be available with the in-charge of

administration in closed envelope.

2.17 Should have proper back-up policy – daily, weekly & monthly – off / on site .

2.18 Effective Off-site Back-up facility in the same city to be available.

2.19 Data to be replicated at back-up server at least on a daily basis.

2.20 Back- up Server to be updated promptly with latest patches supplied by the IDRBT alongwith production server.

2.21 BCP testing / drill at quarterly intervals.

2.22 Space monitoring by the administrator – on a daily basis.

UNQUOTE

The above guidelines are comprehensive and Banks adhering to the same would be providing World-Class ePayments facilities to their customers.

Multiply the Magic of ePayments

RTGS Customer Transactions Returned – Standard Messaging Rules

RTGS Customer Transactions Returned – Standard Messaging Rules.

Once again Reserve bank of India, has taken a proactive step, to boost the popularity of ePayments.

Department of Payment and Settlement Systems, of the RBI has a very dynamic team, which I observe responds very fast to the customer’s views(Or am I biased)

The Functions of Department of Payment and Settlement Systems(DPSS) in brief are

The Department of Payment and Settlement Systems (DPSS) is a new department in the Reserve Bank which was operational with effect from March 2005. The Department is responsible for regulation and oversight on the Payment and Settlement Systems which encompass the cheque based clearing systems managed by the Reserve Bank and other commercial banks, Electronic Clearing Service (ECS), Electronic Funds Transfer (EFT) System, the inter-institutional Government Securities clearing, the inter-bank foreign exchange clearing as also the RTGS. The Department also provides secretarial support to the newly constituted Board for regulation and supervision of Payment and Settlement Systems (BPSS), which happens to be a Committee of the Central Board.(Extracted from Reserve Bank of India website)

For more details of the Department of Payment and Settlement Systems, please visit

http://www.rbi.org.in/scripts/AboutUsDisplay.aspx?pg=Depts.htm#DPSS

One major drawback the customers were having with RTGS Transactions, is the delayed credit of funds, returned to them by the Beneficiary Bank.

As per the RTGS Business Guidelines, funds that cannot be credited to the account of the beneficiary for some reason or other, has to be sent back to the sender’s account within one hour and thirty minutes. The Beneifcary Bank, returns the funds to the Ordering Bank, as an Interbank Transaction. At present, an RTGS customer transaction that is returned to the originating bank, is treated as an inter bank transaction.

As there are no standard messaging rules for Inter-bank Transactions, the Remitters complained that in case the funds are ‘RETURNED’, the corresponding credit to their accounts was getting delayed.

This message was being conveyed to Reserve Bank Of India too, at various forums.

To address this issue, RBI vide Lr.No. RBI/2008-09/499,DPSS (CO) RTGS No. 2246 / 04.04.002 / 2008 – 2009 dated June 16, 2009, addressed to Chairman and Managing Director / Chief Executive Officer of all banks participating in RTGS, has advised Banks to adhere to a common Interbank Message Formats, in case of Return Messages.

The complete letter can be accessed at http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5036&Mode=0

Enjoy and spread the magic of ePayments

Bio-metric wage payments-launched in India

Bio-metric wage payments-launched in India

A small step, but significant is being taken up by Nizambad District Authorities (Nizambad is in Andhra Pradesh, India), in popularizing ePayments in India.

Following irregularities in the implementation of National Rural Employment Guarantee Scheme (NREGS) in Nizamabad district, authorities are planning to introduce a bio-metric payment system for the benefit of the workers.

The complete article can be accessed at

http://timesofindia.indiatimes.com/Cities/Hyderabad/Bio-metric-wage-payment-system-for-NREGS-workers/articleshow/4656295.cms

What is Biometrics?

Biometrics refers to the use of an automated system to verify personal identity through physiological or behavioral characteristics. Biometric technologies form the basis for highly secure identification and verification systems. With identity theft and fraudulent activity increasing, biometric-based solutions can provide increased security and confidentiality of personal and financial data.

More secure than PIN numbers, passwords, social security numbers and signatures, biometrics can authenticate an individual based on unique physical attributes that are difficult, if not impossible, to copy or forge. Although fingerprints are the most popular biometric characteristic used, other measurable traits include: iris, facial, voice, hand geometry and handwriting recognition.

Trust the following issues have been addressed by the Authorities

01) Proper Training to the Human Personnel, at all levels in the chain.

02) Connectivity between the Main server and PC’s at individual Post-Offices.

03) Security of the Scanned Fingerprints, of the workers.

As this is Pilot rollout, no doubt there will be teething issues.

Biometric Systems can also be experimented by Banks, to increase the financial inclusion of the un-banked population. However, Security of the Scanned Fingerprints has to be addressed thoroughly. With the era of out-sourcing, this is more essential than ever.

Spread the joy of ePayments