Introduction
In the
last two decades technology has played a significant role in improving the
efficiency of the financial system. Information Technology (IT) and the
Communication Networking Systems (CNS) have revolutionalised the
functioning of the entire Banking, Financial Services and Insurance (BFSI)
industries world over. The financial sector has been a large user of IT
and banks, in particular, have been increasingly using IT in their
day-to-day operations.
In the wake of adopting IT
and CNS-based banking solutions, the traditional banking has undergone a
major transformation which has vastly changed the banking landscape in
India. These solutions are basically used under two different channels in
banking. One is IT-based business process engineering and other is
CNS-based communication and connectivity. Of
late, the rapid implementation of technology-based solutions
undertaken by the commercial banks has facilitated them:
(i) to provide a fairly
exhaustive range of products to customers;
(ii) to extend the banking
facilities to the vast majority of population;
(iii) to expand the banking
outreach, especially in the rural areas;
(iv) to improve the quality
of banking services; and
(v) to reduce the
transaction cost.
The
Payment System in India and the Role of RBI
The
Payment System is an important element of the financial sector
infrastructure. The RBI has, therefore, played a
catalytic role, over the years, in creating an institutional
framework for the development of a safe and secure payment system. In
order to develop an efficient payment system, the RBI
has been
issuing various guidelines and introducing policy measures (Please
see Table A).