The efficiency of Indias financial infrastructureof which the payments and settlement
process is a crucial componentis an important factor in promoting financial sector development, in improving the effectiveness of monetary policy, and in reducing the country risk profile. The payments system across the country needs to be integrated.
And what does the RBI do?
They are in the process of changing payment instruments! Newer products and services are being innovated in the developed and developing countries and these are being introduced with suitable modifications/safeguards in India. To put it simply, theyre transforming clearing and settlements and making it an online process.
At the retail level a wide range of payment instruments like EFT, ECS, E-money, Smart Cards and credit cards will cater to the needs of different types of economic transactions. At the level of inter-bank payments and settlements, real time and on-line funds transfer are likely to play a major role both in local as well as inter-city dealings.
The spread and the reach of the modern clearing and settlement solution should enable equal and convenient access from both small and big centres alike. The design of an integrated system should be such that there is a wide choice of payments instruments at the retail level and there is end to end connectivity over all parts of the country to enable delivery of these instruments through fast, reliable and secure communications. An integrated clearing and settlement system would enable real time movement of funds between different financial markets, allow fair and equal access to all the financial intermediaries and enable effective regulatory oversight.