| Murthy was speaking at the international seminar on payment and settlement systems jointly organised by the Reserve Bank of India (RBI), Institute for Development and Research in Banking Technology and the Bank for International Settlements, in Hyderabad. Murthy is former member of the central board of the RBI. |
| "According to the RBI, there are about 48,000 public sector bank branches in the country, of which over 63 per cent are in semi-urban and rural areas. Though over 70 per cent of the branches have attained 100 per cent computerisation, real time gross settlement (RTGS) is available only in 23,500, while the national electronic funds transfer covers less than 5,000 branches," Hence, integrating semi-urban and rural areas into the electronic clearing system was critical, he added. |
| McKinsey estimates that by completely opting electronic payment systems, there could be an annual savings of about $6.3 billion in the country. |
| However, among the retail payment systems, electronic clearing accounted for less than 1.5 per cent of the total transactions in 2004-05. |
| Murthy said that the retail payment systems need to be improved by developing appropriate applications and user-friendly websites with simple interfaces and local content. |
| Murthy also called for elimination of the non-magnetic ink character recognition cheques (MICR) and rolling out of the cheque truncation system (CTS), which basically replaces the paper-based cheque clearing process with imaging technology. |
| The RBI intends to eliminate the non-MICR cheques - which accounted for over 25 per cent of the cheques transacted in 2004-05 by March 2007, while the CTS technology is slated to commence as a pilot by the end of this year. |
| According to a study by The Boston Consulting Group, payments business in banks represent more than 40 per cent of their total revenues and 33 per cent profits. |
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