IDRBT's Pivotal Role in New RTGS

Background

The vibrancy of an economy is determined by the efficacy of its Payment Systems. Payment Systems make the money go round within the economy, enabling a faster movement of goods and services across the economy. From Cash, Cheques and Bills of Exchange, we have come a long way in the Payment Systems, providing Electronic Funds Transfer through various modes. To put the significance of Payment Systems in context, it may be noted that the GDP of the country in 2012-2013 was INR 100 trillion, against the total funds moved through RTGS in the month of September 2013 alone are INR 62 trillion.

While cheque-based clearing systems have moved to image-based clearing and NECS systems, Electronic Fund Transfer in the 20th century suffered from a lack of centralized systems. At this point, Reserve Bank of India mandated IDRBT to develop and operate a secured messaging platform for carrying Financial Messages.

The Structured Financial Messaging System (SFMS) launched nearly a decade ago, has grown from a membership of 30 to now connecting over 160 participants through the IDRBT's INFINET. The SFMS has proved its resilience in handling higher volumes. From processing an average of 30 thousand NEFT transactions in 2004-05, today it processes over 2.0 million transactions in a day. The capacity is built to process 1.4 million transactions in one hour. On an average INR 140 billion is remitted through the NEFT. It has maintained high levels of security and message tracking features and the 2048 key SHA 2 encryption in the entire workflow has been implemented. From 2012, messages of LCs (Letters of Credit) and BG (Bank Guarantees) are also being carried through the SFMS.

SFMS in New RTGS

In the area of wholesale and Inter Bank payments the legacy system suffered from a lack of scalability and features needed for the current banking and treasury operations. In this context, RBI decided to implement a new RTGS system that would be scalable, interoperable with other National Systems and across the globe. For this purpose, the RBI decided to implement ISO-20022 standard messages and use the dependable SFMS platform provided by IDRBT as the messaging backbone of the new RTGS.

IDRBT was part of the team which designed the message formats which conformed to the new ISO 20022 standards. As part of the enhanced SFMS application, XSDs (validation parameters) for validation for all types of new message formats were developed by IDRBT.

The CBS (Core Banking Systems) applications of banks were designed to generate RTGS messages for the earlier used customized MT standard messages. Banks would have had to modify or develop interface modules to create ISO 20022 standard messages in the new RTGS system. In order to enable early implementation of the new standards at the settlement, SFMS provided a convertor to banks to process presently used formats into ISO messages to enable participation in New RTGS.

Dissemination

For a project of this magnitude to roll out, taking all stakeholders on board is a vital requirement. IDRBT, along with the Reserve Bank of India, conducted and participated in a number of familiarization programmes and workshops covering all categories of banks. This was followed by continued handholding of banks at every stage of implementation. Feedback received from banks and other participants were included in change requests and included in the processing. Inconsistencies in routing sequences were addressed by extending the functionalities of SFMS to enable banks to easily migrate to the new platform and continue their STP work flow.

Innovations in SFMS

For the first time, the SFMS platform, which was based on Windows-OS was ported on to the IBM's Mainframe on Linux-OS. Many modifications were made including placing HSM-based (hardware security module) encryption/decryption and signing on the Mainframe, which is also significant.

Scalability, speed, flexibility, transparency, high availability, better management of liquidity are some of the hall marks of the NG-RTGS.

IDRBT is delighted at the opportunity of working with RBI team in using and upgrading its infrastructure to carry RTGS traffic through INFINET AND SFMS gateway.

Launch and Participation

Dr. Raghuram G Rajan, Governor, Reserve Bank of India launched the new RTGS at Mumbai on Saturday, October 19, 2013. It is observed that more than 99.5 per cent of the over 16.5 lakh transactions processed in the first 5 days went through the SFMS platform. Over 160 banks have succefully migrated to the NG-RTGS without any major glitches. We would like to place on record wonderful understanding and cooperation received by all the 160 participants for successful launch.