Dispute Resolution Mechanism under the Payment and Settlement Systems Act, 2007

Dispute Resolution Mechanism under the Payment and Settlement Systems Act, 2007

As the numbers of transactions in the Payment Systems are on the increase, it is but natural that the complaints too should rise.

A number of complaints found their way to Reserve Bank of India, DPSS for an amicable solution.

To bring in Uniformity and transparency amongst the Dispute Settlements, RBI DPSS has issued detailed guidelines.

The same can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6009&Mode=0

The relevant Notification Number is:  RBI/2010-11/213/DPSS.CO.CHD.No.654/03.01.03/2010-2011 dt.         September 24, 2010

QUOTE

01) Scope of the Dispute Resolution Mechanism will generally be limited to interpretation, scrutiny and resolution of disputes within the ambit of rules, regulations, operational and procedural guidelines relating to the payment products, various instructions issued by the system providers, instructions and directions issued by RBI, etc., from time to time.

02) Use of the mechanism will not be resorted

a) to deal with aspects relating to acts of system participants (or providers) that are prima-facie fraudulent or

b) are internal to their operations or

c) outside the payment and settlement system infrastructure.

03) The Dispute Resolution Mechanism will also not cover disputes

a) between system participants and their customers (ultimate users),

b) between members of the payment systems and their sub-members

c) or between sub-members themselves.

UNQUOTE

The highlights of this Notification are:-

The various products under the Payments and Settlement Systems are divided into 3 broad areas viz:-

a) Clearing House-related activities, including paper (cheques) and retail electronic (ECS) payment products

b) Products those are national in character viz. National Electronic Clearing Service (NECS), National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) system

c) All other payment systems (other than those operated by RBI) like CCIL, NPCI, ATM networks, cross border money transfers, cards, etc.

The PRD (Panel for Resolution of Disputes) should dispose of the dispute, within 15 working days of receiving the same.

Likewise, the Appellate authority too has to dispose of the Appeals, within 15 working days.

            The Dispute Resolution mechanism should lead to greater understanding of the functioning of the Payments and Settlements Act 2007, amongst all the state-holders. As more and more Disputes are resolved, the efficiency of the Payments System will increase. This will attract new customers and new transactions, into the Payment Systems ambit.

Cheque Truncation System – 2010 – (CTS 2010) Guidance Note by National Payments Corporation of India (NPCI)

Cheque Truncation System – 2010 – (CTS 2010) Guidance Note by National Payments Corporation of India (NPCI)

As the deadline for CTS-2010, is coming closer, the various stake-holders are getting their act together

As per RBI Notification No RBI/2009-10/323/DPSS.CO.CHD.No.1832/04.07.05/2009-10  dt.February 22, 2010, IBA(Indian Banks Association) and NPCI, are the coordinating agencies, for CTS - 2010.

Towards this end, NPCI has on 21^st September, 2010 issued a Guidance Note for the roll-out.

The complete Guidance Note can be accessed at

http://www.npci.org.in/CTCircular.aspx

The highlights of the Guidance Note are :

Orders placed by Banks for Cheque Forms, on or after 01/10/2010, must  comply with CTS – 2010 Security features

The Security features contain Mandatory features as well as Optional features

The Mandatory Security features are : -

A) Water Mark (to be incorporated at the paper manufacturing stage)

B) Void Pantograph ( at printing stage)

C)Ultra-violet logo of Bank(at printing stage)

D) Standardized field placements of a cheque

E) Cheque printing colours and background.

F) Microlettering.

G) New Rupee Symbol at CAR (Courtesy Amount Recognition) amount in figure field.

H) Printer Name along with CTS – 2010

Optional Features:-  These are optional features based on the Banks risk perception.

(i) Supplementary watermark containing their own logo  - - - A watermark is a recognizable image or pattern in paper that appears as various shades of lightness/darkness when viewed by transmitted light (or when viewed by reflected light, atop a dark background), caused by thickness or density variations in the paper

(ii) Embedded fluorescent fibres, - - - Invisible colored fluorescent fibres are embedded into the paper during the manufacturing process. The fibres are invisible to the naked eye, but become visible when viewed under an ultra violet lamp. This can be placed at random locations or at pre-determined locations on the Cheque forms.

(iii) fugitive ink, - - - Water fugitive ink is sensitive with most liquid solutions and will smear and stain the document.  Most official stamps uses water fugitive inks (McGraw-Hill, 2007).  This security feature makes it apparent if a document has been altered.

(iv) secondary fluorescent ink, - - - Fluorescent inks are naturally bright inks that reflect and emit light making use of UV light waves, which other inks cannot take advantage of.

(v) Toner fusing - - - Toner Fuse Technology causes Laser Toner to bond permanently to the paper surface. This covert security feature makes it impossible to "lift" words and numbers off the surface of the paper using adhesive tape, without destroying the paper surface.

(vi) check- sum.

(vii) Patterns

(vii) Floral designs

(ix) bleeding ink, - - - An option of bleeding ink could be implemented on a cheque which makes fraud impossible using any water based chemicals, if applied to the cheque a colored solvent reacts and spoils the cheque.  

(x) Structural magnetic security thread

(xii) Hot stamped holograms on multi-city cheques and demand drafts

(xiii) auto-detection tools

(xiv) Use of UV band on sensitive and  key areas of interest on a cheque such as Legal Amount Recognition (Amount in Words), Courtesy Amount Recognition (Amount in Figures), Signature, Beneficiary Name

(xv) pre-encoding of amount field on the MICR band for demand drafts / pay orders (above a self-decided cut-off) before issue to customers

(xvi) Use of check-sum on the face of demand drafts / pay orders (other than the MICR band), etc.

NPCI has advised banks that the additional security features adhere to CTS – 2010 specifications and also not Image heavy.

The deadline for implementation of the CTS 2010 standards is 31/12/2010.

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          One of the interesting aspect of this Guidance Note is that the CTS 2010 Specifications are applicable to all Cheque forms, and not only for Cheques forms for branches under the CTS (Cheque Truncation System) locations.

This might be to ensure that the Speed Clearing process does not get de-railed and also to ensure uniformity amongst the Cheque forms, in our country.

As the INR symbol has been adopted, this also is finding place on the new Cheque Forms.

I guess the next Guidance note will be on the transition period for existing Cheque Forms, already in the financial system. As it is, still Non-MICR cheques are being issued by few Government Departments.

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Another fascinating facet of this Guidance Note, is that the testing fee of Rs1000/- per Cheque Form Batch is to be remitted by Payorder/Demand Draft, and through NEFT.

Yes, I would have preferred the testing fees through NEFT rather than Pay Order/Demand Draft.

Uniformity in penal interest payable by banks for delays in credit / return of NEFT / NECS / ECS transactions

Uniformity in penal interest payable by banks for delays in credit / return of NEFT / NECS / ECS transactions

As a customer friendly feature and to improve ePayments in India, Reserve Bank of India, DPSS, has issued a Notification on Uniformity in penal interest payable by banks for delays in
credit / return of NEFT / NECS / ECS transactions.

The Notification No. is RBI/2010-11/188 DPSS (CO) EPPD No.  477/ 04.03.01 / 2010-11, dt. September 1, 2010.

This Notification can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5976&Mode=0

Why was this Notification required:-

01)  In terms of the NEFT / NECS / ECS Procedural Guidelines as also the relevant circulars / instructions issued by Reserve Bank of India,  from time to time, member banks need to afford credits to beneficiary accounts or return transactions (uncredited for whatever reason) to the originating / sponsor bank within the prescribed timeline. Any delays in doing so attract penal provisions specified therein.

02)  The penal provisions were  not uniform across these retail electronic payment systems

03)  The spike in the NEFT/ECS transactions is an encouraging feature.

The Highlights of the Notification are: _

01)  Uniformity has been brought in with respect to the penal interest payable for delayed credits/returns across Electronic Retail Products.

02)  The new rate at which the Banks have to pay the penal interest is RBI LAF Repo Rate plus two percent.

03)  The penal interest should be credited to the customer’s account, without any specific request from the customer. THIS IS THE BEST PART.

04)  NEFT Origination Banks have been advised to ensure that the NEFT Outward transactions are executed in the next available batch. This is for both across the counter as well as online requests.

05)  In case of likelihood of delays, the customers should be informed of the same.

06)  The changes are applicable with immediate effect.

The implications are:-

01)  This will encourage Banks to strengthen their ePayments infrastructure, not only the IT part, but also the points-of-delivery.

02)  This will encourage customers to move majority of their payments from the paper mode to electronic mode.

NEFT Holidays 2010 – 11/09/2010

NEFT Holidays 2010 – 11/09/2010

RTGS and NEFT are closed on 11/09/2010. Of course, by now, ePayment users must have become familiar with the RTGS/NEFT Holidays and planned their ePayments accordingly.

ECS is closed across India, except Trivandrum location. Today Banks in Kerala are working, and there is no Holiday for either Ramzan or Ganesh Chaturthi.

10/09/2010 - RTGS is working - 10/09/2010 - NEFT is working

10/09/2010 – RTGS is working. 10/09/2010 – NEFT is working.

Public Holiday under Negotiable Instruments Act, 1881 for the year 2010, for Ramzan is spread over two days i.e 10^th September, 2010 and 11^th September, 2010

However, RTGS/NEFT is working on 10^th but closed on 11^th September, 2010

It has been a long time, since RTGS/NEFT is closed for two days in a row.