Source: RBI
The development of payment and settlement systems conforming to the best international standards has been a key objective of the Reserve Bank. A milestone was crossed during 2003-04 with the commencement of the Real Time Gross Settlement (RTGS) as a facility available for quick, safe and secure electronic mode of funds transfer. Preparation of the draft legislation relating to payment and settlement systems was another important development. The legislation aims at providing a sound legal basis to various payment and settlement systems operating in India and empowers the Reserve Bank to regulate and supervise such systems.
Payment Systems
The overall turnover through the various payment and settlement systems rose by 1.4 per cent during 2003-04 to Rs.1,60,15,716 crore. This was mainly in the form of retail payment such as Electronic Clearing Services (ECS), Magnetic Ink Character Recognition (MICR) and Non-MICR clearing. Retail payment systems constitute the bulk of the volume of payment transactions of the country. The settlement of the retail systems is typically accomplished in the form of Deferred Net Settlement (DNS) Systems. The predominant mode of retail payments comprises the cheque clearing system (constituting the MICR and Non-MICR clearings). Other systems, which include electronic systems such as the Electronic Clearing Service (ECS – Debit and Credit), Electronic Funds Transfer (EFT), the Special EFT (SEFT) and card based systems (credit, debit, ATM and smart cards), are gaining acceptance. While ECS-Credit and ECS-Debit systems are for bulk payments akin to the automated clearing houses (ACH) elsewhere, the EFT and SEFT systems are for individual transactions. The ECS-Credit, EFT and SEFT systems are credit transfer based modes of payments, whereas the ECS-Debit system is based on direct debits.
RTGS Implementation in India
With the commencement of the operations of the Real Time Gross Settlement (RTGS) system India crossed a major milestone in the development of systemically important payment systems (SIPS) and complied with the Core Principles framed by the Bank for International Settlements (BIS). It was a 'soft' launch with four banks, besides the Reserve Bank, as participants. In addition to the service provider, the Reserve Bank is also a participant in the RTGS System. Currently, there are 71 direct participants in the RTGS system. Scheduled banks, primary dealers and clearing houses numbering around 125 are the targeted members. RTGS provides for transfer of funds relating to inter- bank settlements as also for customer related fund transfers. More than 75 per cent of the value of inter-bank transactions, which was earlier being settled through the deferred net settlement systems (DNSS) based Inter-bank clearing, is now being settled under the RTGS.
Intra-day Liquidity under RTGS System
Payment systems based on discrete time are known as deferred net settlement systems (DNSS), while continuous-time settlement systems are referred to as real time gross settlement (RTGS) systems. Under DNSS, each participant pays/receives only the net amount. Typically, the central bank acts as the settlement agency by debiting/crediting current accounts maintained by the participants with it. The RTGS system, on the other hand, embodies settlement of transactions instantaneously, i.e., on a gross basis, thereby completely obviating the need for any clearing arrangement in the transaction.
The advantage of DNSS is a lower level of collateral/settlement balance requirement for effecting payment transactions as against higher level of collateral/ settlement balance under RTGS system. Settlement risk in the event of default is, however, higher under DNSS. The Reserve Bank would provide the intra-day liquidity (IDL) to RTGS participants. This may eliminate liquidity risk but the credit risk is transferred from the participants to the central bank. Cross-country experiences in dealing with credit risk show that central banks may
(i) adopt strict membership standards for participants;
(ii) require full collateralisation with suitable margin; and
(iii) enforce participant-wise caps for granting intra-day credit.
The underlying principle in a intra-day credit facility is that participants must extinguish it by the close of the day by fiat money to the central bank. Thus, the stock of reserve money which expands during the course of the day returns to its initial level.
In order to minimise credit risk, IDL would be provided against Central Government marketable securities with appropriate haircut up to a limit of three times of net owned funds (NOF) (Tier-I capital) as per the latest audited balance sheet. It is imperative to ensure that there exists a firewall between the intra-day and inter-day markets so that users would not have any incentive to use such funds for speculative purposes.
Accordingly, if a participant is unable to extinguish its intra-day repo position during the course of the day, the outstanding amount would attract a penal rate pegged at twice the Bank Rate or twice the corresponding day's maximum call money rate, whichever is higher. If this breach (i.e., spillover to the overnight loan) occurs once, the participant would have to pay the penalty, besides being cautioned by the Reserve Bank. The account would also be placed under surveillance. If it happens for a second time in a six-month period, the intra-day facility would be suspended by the Reserve Bank and supervisory surveillance would be triggered.
For restoration of the intra-day facility, reasonable evidence has to be provided to the Reserve Bank that prudential treasury management is in place. If after restoration, it recurs for the third time during the six-month period, the intra-day facility would be withdrawn permanently. For this purpose, the six-month period would cover April-September and October-March and intra-day maturity would be defined as the length of the official working hours in a day.
Settlement Systems
Paper-Based Clearing: Cheque clearing continued to be the most important retail settlement system in terms of volume, with its share being 81 per cent in total transactions recorded during 2003-04. MICR-based clearing operations, which commenced in 1986 at the four major metropolitan centres, is emerging as an efficient method for processing paper based funds movement. Expansion of the coverage of MICR technology is being pursued in a phased manner.
The Reserve Bank initiated arrangements with the State Bank of India to set up back-up MICR Cheque Processing Centres. While the back-up centres at Chennai and Mumbai were set up in 1998 and 1999 respectively, the centres at Delhi and Kolkata were made operational during 2003-04. Testing of the back-up centres with full volumes is conducted periodically to take care of any contingency. Centres situated nearby can operate as back-up centres for one another. Efforts are also underway in India to build the infrastructure for effective regulation and supervision of payment and settlement systems in anticipation of the statutory changes envisaged under the draft 'Payment and Settlement Systems Bill'.
A Board for Payment and ettlement Systems (BPSS) is proposed to be constituted under the Reserve Bank of India Act, 1934, which will be in the form of a Committee of the Central Board of Directors of the Reserve Bank.
The mandate of the BPSS would cover:
• Laying down policies for regulation and supervision of the payment and settlement systems, both electronic and non-electronic systems as well as domestic and cross-border systems;
• Laying down the standards for both existing and future payment and settlement systems;
• Determining the criteria for access to membership, continuance of membership, removal from membership as well as denial of membership of entities to the various payment and settlement systems;
• Fixing and administering penalties for violation of rules/guidelines/directions.
• Pending the enactment of the Payment and Settlement Systems Act, the BPSS will create the necessary administrative structure within the existing rules and regulations for ensuring the effective regulation and supervision of the payment and settlement systems.
Reduction of the time taken for processing of paper-based instruments has been engaging the attention of the Reserve Bank. To the extent that the physical instrument needs to be transported from the collecting bank branch to the drawee bank branch, delay is in-built into the paper based instrument clearing mechanism. Cheque truncation is one of the measures adopted in several countries to remove this systemic handicap. Payment instruments do not get transported all the way, but get stopped or truncated at a point in the cycle and thereafter, only information about the instrument and/or its image flows electronically to the drawee bank branch for payment.
A Working Group on Cheque Truncation and E-cheques was constituted to recommend a suitable model of cheque truncation for India. The Working Group on Cheque Truncation and E-cheques recommended an image based cheque truncation at the presenting bank for all cheques, irrespective of value, beginning with the four metro centres. The physical cheques will be truncated within the presenting bank to derive maximum efficiency and settlement will be generated on the basis of the current structure of the MICR fields. Electronic images will be used for payment processing. Grey Scale technology for image capture will be used for imaging. The preservation period of paper instruments will be one year and that of the electronic images will be eight years.
A centralised agency per clearing location will act as an image warehouse for banks. Minimum entry norms for the warehouse agency such as technical competency, efficiency orientation and size of resources have been recommended. Deployment of Public Key Infrastructure (PKI) to protect data and image flow over the network and to establish authenticity, non-repudiation and integrity and use of digital signatures is another recommendation of the Group. Certification process based on Information Security Audit guidelines of the Reserve Bank for participants has been recommended. Countermanding payments and recording stops will be allowed till the time of payment, as is the existing practice.
The implementation of cheque truncation will result in accelerated cheque clearing and settlement process, especially for the outstation cheques. Tenders for the procurement of the central system for the Clearing House at Delhi were floated and the process of evaluation of the technical bids received from vendors is currently under progress. Banks have been advised to take initial steps for procuring the requisite systems at their end.
Payment System Infrastructure and Utilities
The Indian Financial Network (INFINET), established by the IDRBT as the secure, exclusive communication backbone for the banking and financial sectors, registered further growth during the year with the membership going up to 163. The bandwidth of the network was considerably enhanced to meet the growing demand and for improving performance and availability.
The terrestrial links of the network between the metropolitan centres were upgraded to 4 mega bytes per second (mbps) from 2 mbps, while the links connecting other centres were upgraded to 2 mbps from 64 kilo bytes per second. The link between Mumbai and Hyderabad was quadrupled to 8 mbps. Furthermore, connectivity to INFINET was enabled through Integrated Services Digital Network (ISDN) channels to provide redundancy so that additional mode of access is available. The INFINET has become a hybrid network with satellite, terrestrial and ISDN connectivities. Wireless connectivity in the form of radio frequency links is also being tested to enhance its robustness.
The INFINET’s Structured Financial Messaging Solution (SFMS), which is a domestic messaging system similar to the system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), was upgraded during the year to allow transmission of files in a secure manner. Initiatives are being contemplated for providing access to SFMS through the Internet. This would facilitate the usage of SFMS by a larger section of the financial community and provide for seamless integration of messages with members of the INFINET as also with other financial sector participants.
As part of measures aimed at enhancing the facilities available through INFINET, the IDRBT is constantly providing upgrades to the network. Some of the activities planned for the near future include the provision of increased bandwidth in the form of increasing the capacity of the leased lines between the major metropolitan centres to 8 mbps and across other cities to 2 mbps. The Network Management System (NMS) at the IDRBT would closely monitor availability of the network so that the high levels of availability (which is in excess of 99.9 per cent) are maintained.
IT in the Reserve Bank
The primary role of information technology (IT) within the Reserve Bank is to support its business objectives and to provide efficient customer services. A Strategic Information Technology Plan (SITP) is being prepared to provide the framework for effective management of information technology resources in the Reserve Bank.
The plan is built on an IT management model based on both centralised and decentralised IT management, decision making and support. Information security is a key requirement in a technology intensive environment. A comprehensive Information Security Policy (ISP) covering the various information assets of the Reserve Bank was prepared following international best practices and codes, including the ISO 17799 code on Information Security.
Information Security Policy
The objective of the Information Security Policy is "to provide the Reserve Bank with a critical minimum information security framework to address and manage various security risks to information assets and quality maintenance". These assets include information processing facilities, information system functions, information shared electronically, information transmitted by mail or through other communication media, information transmitted through computer network or other electronic means and information stored or reprinted on paper.
The IS Policy categorises information based on its nature of sensitivity. The Policy will apply to all the units of the Reserve Bank, subsidiaries and managed affiliates which share IT resources. It will also apply to all service providers who perform any function of relevance. The policy will be supplemented by the best practices, procedures and guidelines for IT / Information Security.
Disaster Recovery Management and Business Continuity Plan
The Reserve Bank has adopted a dual strategy for its DRS/ BCP - one for mission critical applications and the other for other applications. The approach towards Business Continuity is to ensure that in case of any contingency, operations are resumed within a minimal time gap of two hours in the case of mission critical applications and within a day in the case of others. While both the applications will have off-city recovery and business continuity site/s, the mission critical applications will have on-city recovery and continuity site as well.
The IT resources and assets will be consolidated in the form of Data Centres both at the Primary Site and at the Recovery and Continuity site/s. Data processing requirements of the Central Office Departments (CODs) would be provided by the systems at the Data Centre. Normal day-to-day operations of the regional office (RO) applications and other locations would work independently, i.e., independent of the Data Centres but would provide means to upload daily transactions to these Data Centres. In case of an emergency, the affected COD/RO would operate the computer systems from the Data Centre/s either remotely from the affected location or from its application from any of the two Data Centres.
IT Efforts in the Reserve Bank
One of the key objectives for IT implementation within the Reserve Bank is to ensure desktop computing capability for every employee, which would result in a 1:1 ratio in respect of computers and employees. An Intranet of the Urban Banks Department (UBD), which acts as a common platform for communication between its regional offices and the central office, was made operational.
The Centralised Public Debt Office Module under the integrated PDO-NDS-SSS system was implemented in all 14 Public Debt Offices (PDOs) of the Reserve Bank.. The second phase of the Centralised Funds Management System consisting of the Funds Transfer module with latest Public Key Infrastructure (PKI) - based security is ready for implementation. It will provide Straight Through Processing (STP) capability for banks.
The Integrated Establishment System (IES) is a platform for establishment related payments/recoveries apart from payroll processing. In order to provide internet banking services to the customers of the Reserve Bank, a secured Internet Website was established and is currently under testing. This system will facilitate two-way electronic access to those constituents who are not members of the INFINET. A blue print for an Enterprise Knowledge Management System (EKMS) will be implemented in stages.
Disaster Recovery Management
Critical importance was attached to the back-up and disaster recovery management systems in 2003-04. Two geographically dispersed sites were identified as back-up/disaster recovery and data centres are being set up at these locations. The back-up site established for mission cr itical applications was tested for live operations during the year.
Outlook
The Reserve Bank is committed to providing a safe, secure, efficient and integrated payment and settlement system for the country. The operationalisation of the RTGS would greatly facilitate the optimum utilisation of funds. The draft bill on the constitution of the Board for Payment and Settlement Systems under the Reserve Bank of India Act, 1934 would provide an explicit legal sanction to the Reserve Bank’s oversight of payment and settlement systems. The INFINET is emerging as the communication backbone for the banking and the financial sector. Cheque truncation is expected to reduce the delay in payment system considerably. Continuous efforts towards upgradation of technology within the Reserve Bank would help in improving its customer services. Initiatives for setting up disaster recovery management would gather momentum with comprehensive business continuity plans to anticipate disasters and cope with them.
The development of payment and settlement systems conforming to the best international standards has been a key objective of the Reserve Bank. A milestone was crossed during 2003-04 with the commencement of the Real Time Gross Settlement (RTGS) as a facility available for quick, safe and secure electronic mode of funds transfer. Preparation of the draft legislation relating to payment and settlement systems was another important development. The legislation aims at providing a sound legal basis to various payment and settlement systems operating in India and empowers the Reserve Bank to regulate and supervise such systems.
Payment Systems
The overall turnover through the various payment and settlement systems rose by 1.4 per cent during 2003-04 to Rs.1,60,15,716 crore. This was mainly in the form of retail payment such as Electronic Clearing Services (ECS), Magnetic Ink Character Recognition (MICR) and Non-MICR clearing. Retail payment systems constitute the bulk of the volume of payment transactions of the country. The settlement of the retail systems is typically accomplished in the form of Deferred Net Settlement (DNS) Systems. The predominant mode of retail payments comprises the cheque clearing system (constituting the MICR and Non-MICR clearings). Other systems, which include electronic systems such as the Electronic Clearing Service (ECS – Debit and Credit), Electronic Funds Transfer (EFT), the Special EFT (SEFT) and card based systems (credit, debit, ATM and smart cards), are gaining acceptance. While ECS-Credit and ECS-Debit systems are for bulk payments akin to the automated clearing houses (ACH) elsewhere, the EFT and SEFT systems are for individual transactions. The ECS-Credit, EFT and SEFT systems are credit transfer based modes of payments, whereas the ECS-Debit system is based on direct debits.
RTGS Implementation in India
With the commencement of the operations of the Real Time Gross Settlement (RTGS) system India crossed a major milestone in the development of systemically important payment systems (SIPS) and complied with the Core Principles framed by the Bank for International Settlements (BIS). It was a 'soft' launch with four banks, besides the Reserve Bank, as participants. In addition to the service provider, the Reserve Bank is also a participant in the RTGS System. Currently, there are 71 direct participants in the RTGS system. Scheduled banks, primary dealers and clearing houses numbering around 125 are the targeted members. RTGS provides for transfer of funds relating to inter- bank settlements as also for customer related fund transfers. More than 75 per cent of the value of inter-bank transactions, which was earlier being settled through the deferred net settlement systems (DNSS) based Inter-bank clearing, is now being settled under the RTGS.
Intra-day Liquidity under RTGS System
Payment systems based on discrete time are known as deferred net settlement systems (DNSS), while continuous-time settlement systems are referred to as real time gross settlement (RTGS) systems. Under DNSS, each participant pays/receives only the net amount. Typically, the central bank acts as the settlement agency by debiting/crediting current accounts maintained by the participants with it. The RTGS system, on the other hand, embodies settlement of transactions instantaneously, i.e., on a gross basis, thereby completely obviating the need for any clearing arrangement in the transaction.
The advantage of DNSS is a lower level of collateral/settlement balance requirement for effecting payment transactions as against higher level of collateral/ settlement balance under RTGS system. Settlement risk in the event of default is, however, higher under DNSS. The Reserve Bank would provide the intra-day liquidity (IDL) to RTGS participants. This may eliminate liquidity risk but the credit risk is transferred from the participants to the central bank. Cross-country experiences in dealing with credit risk show that central banks may
(i) adopt strict membership standards for participants;
(ii) require full collateralisation with suitable margin; and
(iii) enforce participant-wise caps for granting intra-day credit.
The underlying principle in a intra-day credit facility is that participants must extinguish it by the close of the day by fiat money to the central bank. Thus, the stock of reserve money which expands during the course of the day returns to its initial level.
In order to minimise credit risk, IDL would be provided against Central Government marketable securities with appropriate haircut up to a limit of three times of net owned funds (NOF) (Tier-I capital) as per the latest audited balance sheet. It is imperative to ensure that there exists a firewall between the intra-day and inter-day markets so that users would not have any incentive to use such funds for speculative purposes.
Accordingly, if a participant is unable to extinguish its intra-day repo position during the course of the day, the outstanding amount would attract a penal rate pegged at twice the Bank Rate or twice the corresponding day's maximum call money rate, whichever is higher. If this breach (i.e., spillover to the overnight loan) occurs once, the participant would have to pay the penalty, besides being cautioned by the Reserve Bank. The account would also be placed under surveillance. If it happens for a second time in a six-month period, the intra-day facility would be suspended by the Reserve Bank and supervisory surveillance would be triggered.
For restoration of the intra-day facility, reasonable evidence has to be provided to the Reserve Bank that prudential treasury management is in place. If after restoration, it recurs for the third time during the six-month period, the intra-day facility would be withdrawn permanently. For this purpose, the six-month period would cover April-September and October-March and intra-day maturity would be defined as the length of the official working hours in a day.
Settlement Systems
Paper-Based Clearing: Cheque clearing continued to be the most important retail settlement system in terms of volume, with its share being 81 per cent in total transactions recorded during 2003-04. MICR-based clearing operations, which commenced in 1986 at the four major metropolitan centres, is emerging as an efficient method for processing paper based funds movement. Expansion of the coverage of MICR technology is being pursued in a phased manner.
The Reserve Bank initiated arrangements with the State Bank of India to set up back-up MICR Cheque Processing Centres. While the back-up centres at Chennai and Mumbai were set up in 1998 and 1999 respectively, the centres at Delhi and Kolkata were made operational during 2003-04. Testing of the back-up centres with full volumes is conducted periodically to take care of any contingency. Centres situated nearby can operate as back-up centres for one another. Efforts are also underway in India to build the infrastructure for effective regulation and supervision of payment and settlement systems in anticipation of the statutory changes envisaged under the draft 'Payment and Settlement Systems Bill'.
A Board for Payment and ettlement Systems (BPSS) is proposed to be constituted under the Reserve Bank of India Act, 1934, which will be in the form of a Committee of the Central Board of Directors of the Reserve Bank.
The mandate of the BPSS would cover:
• Laying down policies for regulation and supervision of the payment and settlement systems, both electronic and non-electronic systems as well as domestic and cross-border systems;
• Laying down the standards for both existing and future payment and settlement systems;
• Determining the criteria for access to membership, continuance of membership, removal from membership as well as denial of membership of entities to the various payment and settlement systems;
• Fixing and administering penalties for violation of rules/guidelines/directions.
• Pending the enactment of the Payment and Settlement Systems Act, the BPSS will create the necessary administrative structure within the existing rules and regulations for ensuring the effective regulation and supervision of the payment and settlement systems.
Reduction of the time taken for processing of paper-based instruments has been engaging the attention of the Reserve Bank. To the extent that the physical instrument needs to be transported from the collecting bank branch to the drawee bank branch, delay is in-built into the paper based instrument clearing mechanism. Cheque truncation is one of the measures adopted in several countries to remove this systemic handicap. Payment instruments do not get transported all the way, but get stopped or truncated at a point in the cycle and thereafter, only information about the instrument and/or its image flows electronically to the drawee bank branch for payment.
A Working Group on Cheque Truncation and E-cheques was constituted to recommend a suitable model of cheque truncation for India. The Working Group on Cheque Truncation and E-cheques recommended an image based cheque truncation at the presenting bank for all cheques, irrespective of value, beginning with the four metro centres. The physical cheques will be truncated within the presenting bank to derive maximum efficiency and settlement will be generated on the basis of the current structure of the MICR fields. Electronic images will be used for payment processing. Grey Scale technology for image capture will be used for imaging. The preservation period of paper instruments will be one year and that of the electronic images will be eight years.
A centralised agency per clearing location will act as an image warehouse for banks. Minimum entry norms for the warehouse agency such as technical competency, efficiency orientation and size of resources have been recommended. Deployment of Public Key Infrastructure (PKI) to protect data and image flow over the network and to establish authenticity, non-repudiation and integrity and use of digital signatures is another recommendation of the Group. Certification process based on Information Security Audit guidelines of the Reserve Bank for participants has been recommended. Countermanding payments and recording stops will be allowed till the time of payment, as is the existing practice.
The implementation of cheque truncation will result in accelerated cheque clearing and settlement process, especially for the outstation cheques. Tenders for the procurement of the central system for the Clearing House at Delhi were floated and the process of evaluation of the technical bids received from vendors is currently under progress. Banks have been advised to take initial steps for procuring the requisite systems at their end.
Payment System Infrastructure and Utilities
The Indian Financial Network (INFINET), established by the IDRBT as the secure, exclusive communication backbone for the banking and financial sectors, registered further growth during the year with the membership going up to 163. The bandwidth of the network was considerably enhanced to meet the growing demand and for improving performance and availability.
The terrestrial links of the network between the metropolitan centres were upgraded to 4 mega bytes per second (mbps) from 2 mbps, while the links connecting other centres were upgraded to 2 mbps from 64 kilo bytes per second. The link between Mumbai and Hyderabad was quadrupled to 8 mbps. Furthermore, connectivity to INFINET was enabled through Integrated Services Digital Network (ISDN) channels to provide redundancy so that additional mode of access is available. The INFINET has become a hybrid network with satellite, terrestrial and ISDN connectivities. Wireless connectivity in the form of radio frequency links is also being tested to enhance its robustness.
The INFINET’s Structured Financial Messaging Solution (SFMS), which is a domestic messaging system similar to the system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), was upgraded during the year to allow transmission of files in a secure manner. Initiatives are being contemplated for providing access to SFMS through the Internet. This would facilitate the usage of SFMS by a larger section of the financial community and provide for seamless integration of messages with members of the INFINET as also with other financial sector participants.
As part of measures aimed at enhancing the facilities available through INFINET, the IDRBT is constantly providing upgrades to the network. Some of the activities planned for the near future include the provision of increased bandwidth in the form of increasing the capacity of the leased lines between the major metropolitan centres to 8 mbps and across other cities to 2 mbps. The Network Management System (NMS) at the IDRBT would closely monitor availability of the network so that the high levels of availability (which is in excess of 99.9 per cent) are maintained.
IT in the Reserve Bank
The primary role of information technology (IT) within the Reserve Bank is to support its business objectives and to provide efficient customer services. A Strategic Information Technology Plan (SITP) is being prepared to provide the framework for effective management of information technology resources in the Reserve Bank.
The plan is built on an IT management model based on both centralised and decentralised IT management, decision making and support. Information security is a key requirement in a technology intensive environment. A comprehensive Information Security Policy (ISP) covering the various information assets of the Reserve Bank was prepared following international best practices and codes, including the ISO 17799 code on Information Security.
Information Security Policy
The objective of the Information Security Policy is "to provide the Reserve Bank with a critical minimum information security framework to address and manage various security risks to information assets and quality maintenance". These assets include information processing facilities, information system functions, information shared electronically, information transmitted by mail or through other communication media, information transmitted through computer network or other electronic means and information stored or reprinted on paper.
The IS Policy categorises information based on its nature of sensitivity. The Policy will apply to all the units of the Reserve Bank, subsidiaries and managed affiliates which share IT resources. It will also apply to all service providers who perform any function of relevance. The policy will be supplemented by the best practices, procedures and guidelines for IT / Information Security.
Disaster Recovery Management and Business Continuity Plan
The Reserve Bank has adopted a dual strategy for its DRS/ BCP - one for mission critical applications and the other for other applications. The approach towards Business Continuity is to ensure that in case of any contingency, operations are resumed within a minimal time gap of two hours in the case of mission critical applications and within a day in the case of others. While both the applications will have off-city recovery and business continuity site/s, the mission critical applications will have on-city recovery and continuity site as well.
The IT resources and assets will be consolidated in the form of Data Centres both at the Primary Site and at the Recovery and Continuity site/s. Data processing requirements of the Central Office Departments (CODs) would be provided by the systems at the Data Centre. Normal day-to-day operations of the regional office (RO) applications and other locations would work independently, i.e., independent of the Data Centres but would provide means to upload daily transactions to these Data Centres. In case of an emergency, the affected COD/RO would operate the computer systems from the Data Centre/s either remotely from the affected location or from its application from any of the two Data Centres.
IT Efforts in the Reserve Bank
One of the key objectives for IT implementation within the Reserve Bank is to ensure desktop computing capability for every employee, which would result in a 1:1 ratio in respect of computers and employees. An Intranet of the Urban Banks Department (UBD), which acts as a common platform for communication between its regional offices and the central office, was made operational.
The Centralised Public Debt Office Module under the integrated PDO-NDS-SSS system was implemented in all 14 Public Debt Offices (PDOs) of the Reserve Bank.. The second phase of the Centralised Funds Management System consisting of the Funds Transfer module with latest Public Key Infrastructure (PKI) - based security is ready for implementation. It will provide Straight Through Processing (STP) capability for banks.
The Integrated Establishment System (IES) is a platform for establishment related payments/recoveries apart from payroll processing. In order to provide internet banking services to the customers of the Reserve Bank, a secured Internet Website was established and is currently under testing. This system will facilitate two-way electronic access to those constituents who are not members of the INFINET. A blue print for an Enterprise Knowledge Management System (EKMS) will be implemented in stages.
Disaster Recovery Management
Critical importance was attached to the back-up and disaster recovery management systems in 2003-04. Two geographically dispersed sites were identified as back-up/disaster recovery and data centres are being set up at these locations. The back-up site established for mission cr itical applications was tested for live operations during the year.
Outlook
The Reserve Bank is committed to providing a safe, secure, efficient and integrated payment and settlement system for the country. The operationalisation of the RTGS would greatly facilitate the optimum utilisation of funds. The draft bill on the constitution of the Board for Payment and Settlement Systems under the Reserve Bank of India Act, 1934 would provide an explicit legal sanction to the Reserve Bank’s oversight of payment and settlement systems. The INFINET is emerging as the communication backbone for the banking and the financial sector. Cheque truncation is expected to reduce the delay in payment system considerably. Continuous efforts towards upgradation of technology within the Reserve Bank would help in improving its customer services. Initiatives for setting up disaster recovery management would gather momentum with comprehensive business continuity plans to anticipate disasters and cope with them.
Comments
Post a Comment