Intra-bank same-day fund transfer ahead

A pan-India electronic funds transfer (EFT) system is set to become a reality in the next couple of months. The Institute for Development and Research in Banking Technology (IDRBT) is putting together an 'end-to-end' process software that will link up networked branches of all banks in the country to facilitate speedy, secure, and reliable funds transfer.

Banks as well as customers stand to gain as they will be able to effect same day payments from one branch of a bank to another branch of the same bank or a branch of any other bank anywhere in the country.

Essentially what the IDBRT is attempting to do is to integrate and widen the scope of the existing EFT and special EFT systems.

The Institute, which has been promoted by the Reserve Bank of India, will leverage the INdian FInancial NETwork (Infinet) to roll out the nationwide EFT facility.

Financial messages in encrypted form will travel over the Infinet to effect funds transfer instead of physical movement of drafts/ cheques. Further digital signatures will enhance security of the transfers.

The Infinet is the communication backbone of domestic banking and financial Sector. It is a closed user group using a blend of communication technologies such as VSATs and Terrestrial Leased Lines.

With banks embracing information technology/ establishing telecommunication networks at a furious pace, a speedy, secure, accurate and reliable funds transfer system will be a 'win-win' for banks' and their customer alike, R B Barman, executive director, Reserve Bank of India, said.

In fact a real-time credit transfer is also envisaged once the IT systems of banks are streamlined. The public key infrastructure will provide the required security for making such payments.

Banks', on their part, will reap the benefit of efficient funds management.

In case a bank is running a deficit at a local clearing house, it can immediately call for funds from its treasury via the system so that it does not have to seek accommodation (and in the process pay interest) from the manager of the clearing house.