Bank Money

• Baked by Fiat money
• Easy to transfer
• Exact amount can be transferred
• Legally recognized for high value payment

Negotiable Instruments Act, 1881

Bill of Exchange

• 3 parties: future dated promise for payment
• Requires ‘ stamping’

Cheque

• 3 parties: drawer, Drawee (Bank), Payee (recipient)
• .No ‘stamping’, but sign req, may be crossed
• Types depends on date
  1. Stale – lapsed for not withdrawn in 3 months
  2. Postdated – After a specific date
  3. Before a specific date
• Types depends on crossing
  1. Open cheques or travel cheques
  2. Crossing – no cash, deposited in account

Promissory Notes

• I promise to pay bearer the sum of – 2 parties
• Not fiat-money though.

By usage or custom

• Hundis, Share warrants, Dividend warrants, Bankers draft, Circular notes, Bearer debentures, Railway receipts, Delivery orders.

Core Banking

• centralized system established by a bank which allows its customers to conduct their business irrespective of the bank’s branch.
• It removes the impediments of geo-specific transactions.

E-Kuber

• Core banking solution for RBI

Digital Payment

Real Time

• IMPS
• RTGS

Delayed Settlement

• NEFT
• NECS
• NACH
• Card System

Immediate Payment Service (IMPS)

• It is an instant payment inter-bank electronic funds transfer system in India.
• It is available 24/7 throughout the year including bank holidays.
• It is managed by the National Payments Corporation of India (NPCI)
• In 2010, its built upon the existing National Financial Switch network
• Max Amount 10k for mobile and 2 lac for IFSC

Real-time gross settlement (RTGS)

• It transfers money or securities from one bank to another
• Its a “real time” and a “gross” basis system
• Operated by RBI
• Available in weekdays only
• Min amount – 2 lac, Max amount – 500 Cr.

National Electronic Funds Transfer (NEFT)

• It is an electronic funds transfer system
• Maintained by RBI
• Started in November 2005
• Setup was established and maintained by Institute for Development and Research in Banking Technology (IDRBT).
• NEFT settles fund transfers in half-hourly batches
• It has 23 settlements windows between 8:00 AM and 7:30 PM
• It works on week days and the 1st, 3rd and 5th Saturday
• Transfers initiated outside this time period are settled at the next available window
• Max amount 10 lac

Indian Financial System Code (IFS Code or IFSC)

• It is an alphanumeric code that facilitates electronic funds transfer in India.
• A code uniquely identifies each bank branch participating in the two main Payment and settlement systems RTGS and NEFT
• It is an 11-character code
• First 4 alphabetic characters representing the bank name
• Last 6 characters representing the branch
• 5th character is 0 (zero) and reserved for future use

Electronic Clearing Service

• payments are made on a timely-basis like monthly, a year, half a year, etc.
• It used to pay monthly bill, salaries, dividends or commissions, Direct benefit transfer
• Over time it has become one of the most convenient methods of making large payments
• Maintained by RBI in national level

NACH

• Maintain by NPCI
• Same work as ECS

Classification of Digital Payment Service Provider

• Cross Border Money Transfer – Western Union and Moneygram
• Instant Money Transfer Outbound – Empays
• Financial Market Infrastructure – Clearing Corp. of India
• Retail payments – NPCI
• Card Payment network – Visa, Mastercard
• M-walet or PPI – paytm, Phonepe
• ATM

Automated teller machine (ATM)

• ATM works through National Financial Switch (NFS).
• All the transaction use Core Banking Solution
• HSBC 1st installed ATM in india
• 3 types ATM
  1. Banks – own by banks
  2. Brown Label – outsourced by banks
  3. White Label – Non Banks by the help of sponsor bank

Card Payment type

• Debit Card
• Credit Card
• Prepaid card – Need to recharge

Card Technology

• Magnetic – Data on magnetic strip
• Chip Based – Data on chip
• Contactless
  • RFID – Radio Frequency Identification Ex-Fastag
  • NFC – near field communication tech