Centralised fund management system mooted

While reviewing the ongoing initiatives for implementing the CFMS, real time gross settlement system (RTGS), securities settlement system (SSS) and the Structural Financial Messaging Solution (SFMS), the council urged that the implementation be expedited as quickly as possible — within the next one year. On the legal issues, the council suggested that pending the required amendments in the Negotiable Instruments Act, the RBI act and passing of Electronic Funds Transfer Act, the contractual methods could be utilised to ensure that financial transactions take place in electronic mode.

The council suggested appointment of an appropriate consultant for draft of amendments to the Negotiable Instruments Act, the RBI Act and Electronic Funds Transfer Act.

According to an RBI release, the council agreed that intra-day liquidity would have to be provided under the RTGS framework. It was also accepted that the discipline of intra-day liquidity facility should be strictly observed, with penalties in place to act as deterrents for breach of discipline. The council felt that the working of intra-day liquidity should be reviewed periodically.

The council recommended that a scenario building exercise may be incorporated in the work relating to the interface between the payments system and monetary policy conduct.

The council urged that the report of the advisory group on the core principles on payments and settlement systems, as and when concluded, may be examined by the task force on payment and settlement system oversight and the results of the task force’s examination may be placed for discussions of the council in one of its future meetings.

The council also appreciated the efforts put in by the Reserve Bank to promote the development of electronic retail payment modes, including smart cards.