Forget cheques, get money real time

Nov 25, 2006 Personal Finance

A quiet revolution in payments is underway in the banking system. Apparently, demand drafts and cheques will soon be history, as money will be transmitted real-time, making stock market transactions even more efficient.

This will be made possible, thanks to the migration to a core banking system by all nationalised banks in the next couple of years.

One by one, as PSBs embarked upon their core banking programme, they have highlighted customer benefits, including anywhere anytime banking and instant cash transfers. But the implications run beyond this as the payments system on the whole will change.

As per the latest RBI statistics, 78% of branches of PSBs have been fully computerised and nearly 30% of these branches have core banking solutions. With all accounts becoming centralised, banks will be in a position to connect all customers to RBI’s Real Time Gross Settlement (RTGS) system.

As of now, only 27,000 of the total 65,000 branches are equipped to accept transactions under the real time gross settlement system. RTGS caters to time-bound payments such as treasury operations.

However, doing away completely with demand drafts and cheques, at least in the near future, still seems utopian.