Electronic clearing service provides alternative method of affecting bulk payment transactions of a repetitive nature without the need for issuing and handling paper instruments. Payments such as interest, dividends, salaries, pensions etc. may be done against a single debit to an account. Various govt. or corporates, destination account holders can be users of the service.
Under the scheme, the user provides the details of bulk payment transactions on magnetic tape or floppy in a standardized format including the destination account holders who have opted for receiving payment through this system. The sponsor bank passes on this, to national Clearing Cell of RBI. NCC after generation of validation report and confirmation will process the information and send the same to service branches of destination banks. The service branch of the destination banks produce hard copies of the clearing reports and send it to concerned branches for credit of individual accounts of the customers.
The scheme reduces the paper work, cost of printing and dispatch including the one at the destination branches.
The Society for Worldwide Inter-bank Financial Telecommunications was formed during 1973 with its headquarters at Brussels and started functioning in May 1977.RBI, 27 Public Sector Banks and a number of other banks obtained its membership. It provides rapid, secure, reliable and cost-effective mode of transmitting the financial messages worldwide. SWIFT-II system had been launched by the society to bring improvement in the SWIFT- I for catering to the high growth in messages. Swift provides 24 hour facilities such as transfer of messages relating to fixed deposits, interest payment, debit-credit statements, foreign exchange etc. It bears liability arising from loss or delay in delivery of messages, assumes the responsibility for proper functioning of the network and its security. The delivery of message to other than member branches, is responsibility of the user.
BANKNET is a payment network established by RBI (on the recommendations of Iyer Committee) which functions within India and was launched during 1991. The system make use of inter-city trunk voice grade data circuits. The user banks can access BANKNET from their premises through leased or dial-up lines at the local centers using ports on PADS and UNIX machines with popular data communication soft wares. The messages of banking transactions and advices. It enables transfer of data and other statement to RBI. Access to SWIFT is also possible through this system.
It is a communication system operating over the BANKNET. PBINET client running a personal computer is called RBINET Dos client and he can communicate with its server over a dedicated leased line or dial up line.
I-net owned y Deptt of Telecommunications (DoT) is a Packet Switching Public Data Network (PSPDN) which was opened in 1983 for slow speed data communication. I-net uses telephone connections and satellite for communication through which communication is possible across major metropolis and other international networks. The subscribers can also form a private network within I-net.
National Informatics Centre Network (NICNET), a part of internet services was set up in 1975 to promote information culture which is a govt. organization and works for govt. organizations. It provides multiple services to user departments which include finance, agriculture, industry, commerce by making use of various applications. The host computer in NICNET is stationed in New Delhi. Currency chest operations in banks are performed through NICNET.
Magnetic ink character recognition (MICR)
The MICR technology is very popular world wide and in this system, the instruments such as cheque , draft, payorder, gift cheques, traveler cheques etc. can be read directly without the need for transcribing the data on punched cards or paper tapes. The information is printed on the instrument with a special type of ink which is made up of magnetic material. On insertion of the instrument in the machine, the printed information is magnetized and read by the machine.
Different sizes of instrument have been prescribed for various kinds of accounts in India (e.g. saving bank 6.1/2”*2.1/2” and current accounts 8”*3.2/3” ) and the paper selected is of special quality with its weight to be 95 grams/sq mtr width.
The code line on an MICR instrument having a width of 5/8” is divided into five fields i.e. (1) the number of cheque in 6 digits, (2) city , bank and branch codes in 3 digits each, (3) account number in 3 digits , (4) transaction code in 2 digits and (5) amount in 13 digits.
Two machines namely the encoder ( which encodes the instruments in magnetic ink) and reader ( which reads the information and sorts out the instruments) are used in the MICR clearing system.
The MICR system is beneficial as the chances of error are minimized, transfer of funds becomes faster, clearing becomes easy and burden of manual work is reduced . In order to facilitate the operations, the MICR instruments are not to be folded, nothing is to written nor any rubber stamp is to be fixed on the code bands and pins and staples and gum is to be avoided.
Electronic Data Interchange (EDI)
Personal Identification Number (PIN)
These are secret number written on the plastic money cards(Debit cards) with magnetic means and on insertion of the card into an ATM, the machine inquiries about PIN. The machine allows the operation only on typing the correct Pin and it does not permit operation, in case the PIN is not correct. These code numbers should be kept secret without disclosing to anyone else, to avoid their mis-use.
Very small aperture terminals (VSATs)
VSATs works with the help of satellite and uses small antennas with variable sizes working like earth stations. This has helped the banking services by providing speed. VSA terminals can exchange and transmit information through a larger earth station which is called Hub Station having larger size antenna. VSATs are being made use of in banking , stock exchange , corporate networking weather forecasting, international service, reservation etc.