Institutions related to payment systems

Institute for Development and Research in Banking Technology (IDRBT)

During the initial reforms in the Indian banking and financial sector, a need was felt to develop an institute of higher learning, which would also provide information technology support to banks and financial institutions. Dr. Rangarajan Committee reports in the years 1984 and 1989 recommended computerisation of banking operations at various levels. Subsequently, a committee on "Technology Upgradation in the Payment Systems"; was constituted in 1994 which recommended setting up of an Information Technology Institute for Research and Development as well as Consultancy in the application of technology to the banking and financial sector of the country. This led to the birth of IDRBT on June 10, 1996 as a Society under the Society Registration Act, with the objective to spearhead technology absorption in the banking and financial sector.

In its initial years, IDRBT primarily focused on developing and managing technology infrastructure for the banking and financial sectors. It developed the Indian Financial Network (INFINET), the Structured Financial Messaging System (SFMS), the Indian Banking Community Cloud (IBCC), the National Financial Switch (NFS), etc. These systems are the backbone around which PSS in India rally even today. IDRBT is also the Certifying Authority for digital certificates. Research and academic activities at this institute not only engendered the technical know-how for creation of these services, but also helped in training and updating skills in the banking sector.

IDRBT has recently undertaken focused initiatives on major areas of research on the systemic requirements of the banking system and has set up 6 state-of-the-art Research Centres for aiding and promoting research and development work in the areas of Analytics, Cyber Security, Mobile Banking, Affordable Technologies, Cloud Computing and Payment Systems. The Research Centres are being constantly upgraded with latest systems, devices and tools to keep pace with the ever-changing technology trends. IDRBT has also emerged as a premier institution for imparting training to banks in the payments arena.2

Indian Financial Technology and Allied Services (IFTAS)

RBI had constituted an External Expert Review Committee (EERC), headed by its former Governor, Dr. C. Rangarajan for evaluating the activities of IDRBT and re-defining its role and suggesting a roadmap for the future. The EERC, which submitted its report in July 2009, recommended that 'to function as a primary institute of excellence in research and development in banking technology, IDRBT should shed its functions of providing various services by hiving off these services.' This led to the creation of IFTAS as a wholly owned subsidiary of RBI.

Accordingly, IFTAS took over INFINET, SFMS and IBCC services from IDRBT and commenced operations with the aim of providing uninterrupted 24x7 high-quality IT-related services to the Indian banking and financial sector.

IFTAS was created with the mandate to provide critical infrastructure services to RBI, banks, cooperative societies and other financial institutions. IFTAS now provides the following services:

• INFINET, the communication backbone of the Indian banking and financial sector.
• SFMS, a robust messaging platform used in the RBI operated payment systems, i.e., RTGS and NEFT.
• IBCC, a specialised community cloud for the banking and financial sector.
• Global Interchange for Financial Transactions (GIFT), a one-stop integrated PSS providing an end-to-end straight-through processing (STP) of payment messages (inter-bank transactions) between the source bank & destination through the Central Bank.

Clearing Corporation of India Limited (CCIL)

CCIL is a Financial Market Infrastructure (FMI), authorised by RBI under the PSS Act, to operate various payment systems and function as a Trade Repository (TR) for specified instruments. CCIL has been granted the status of a Qualified Central Counterparty (QCCP) in the Indian jurisdiction.

CCIL was setup in April 2001 to provide guaranteed clearing and settlement for transactions in money, government securities, forex and derivative markets. CCIL also provides non-guaranteed settlements for rupee interest rate derivatives and cross currency forex transactions (through CLS Bank). CCIL is, therefore, authorised to operate the following payment systems,

• securities (outright, repo and tri-party repo),
• forex [USD-INR (cash, tom, spot) and cross currency CLS],
• forex forward (USD-INR), and (iv) rupee derivatives [rupee interest rate swaps (IRS) and forward rate agreements (FRA)].

CCIL acts as a TR for all over the counter (OTC) transactions in the forex, interest rate and credit derivatives segments. CCIL also acts as a TR for (i) secondary market trades in Certificates of Deposit / Commercial Papers (ii) market repo / reverse repo transactions in Corporate Bonds / Certificates of Deposit / Commercial Papers / NCDs of original maturity of less than one year and (iii) primary market issuances of Commercial Paper by the respective Issuing and Paying Agent (IPA).

CCIL also acts as a reference point for important benchmarks used by the market under the aegis of the benchmark administrator, Financial Benchmarks India Limited (FBIL) like MTM prices, ZCYC rates and Spot rates.

Source : RBI