DEBIT Reference Guide for On-boarding ‘RuPay Kisan Card’ and ‘RuPay Debit Card’ GIZ – NABARD Rural Financial Institutions Programme in Cooperation with NPCI Imprint Published by: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH GIZ NABARD Rural Financial Institutions Programme Contact: Dr. Detlev Holloh, Programme Director Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH L-20, Green Park (Main) New Delhi 110 016 / INDIA Phone: +91-11-2652 6024 Telefax: +91-11-2652 8612 Email: [email protected] Homepage: www.giz.de Responsible: Amit Arora [email protected] Author: Sunil Aggarwal Editor: Nitin Jindal Design/Layout: [email protected] Second Edition New Delhi, October, 2013 DISCLAIMER Since the guide addresses all SCBs and DCCBs in India, it is possible that the requirements of some banks do not fit into the defined processes. The contents are indicative and supporting in nature. Also the cost heads mentioned in this document are indicative in nature. While every care has been taken to ensure accuracy, banks are advised to exercise their own due diligence and treat this guide only as an additional point of reference. Reference Guide for On-boarding ‘RuPay Kisan Card’ and ‘RuPay Debit Card’ GIZ – NABARD Rural Financial Institutions Programme in Cooperation with NPCI Preface Definition of Payment System the contract governing the relationship among the system participants, the rules and regulations Payment System is a unique and critical part which deal with the operation of the payment of banking activities. This has been regulated system, the terms and conditions of authorization under the Banking Regulations Act 1949 and and the directions given by the RBI from time to the RBI Act 1934. The advent of electronic time. payment system resulted in the paradigm shift in RBI is authorized to issue directions to a payment the way the banking is done. It has given birth system or system participant to cease or desist of ‘Anywhere Anytime’ Banking and a host of from engaging in any act, omission or course of new products, services and conveniences like conduct or direct it to perform any acts as well paperless, cash less payments. It also resulted in as issue general directions in the interests of need to expand the scope of regulations to include the smooth operation of the payment system. electronic payment systems. Accordingly, in RBI is empowered to revoke the authorization 2007, an Act was passed, namely the Payment and granted by it, if the system provider contravenes Settlement Systems Act, 2007 (PSS Act) and the any provisions of the Act or Regulations, fails governing regulations were enacted vide Payment to comply with its orders/ directions or violates and Settlement System Regulations, 2008. the terms and conditions under which the PSS Act defines the payment system as a system authorization was granted to it. that enables payment to be effected between a payer RBI has since authorized several payment system and a beneficiary, involving clearing, payment operators of pre-paid payment instruments, or settlement service or all of them, but does not card schemes, cross-border in-bound money include a stock exchange or clearing corporations transfers, ATM networks and centralized clearing set up under stock exchanges. To decide whether arrangements. RBI is empowered to prescribe a particular entity operates the payment system, it the format of payment instructions, size and must perform either the clearing or settlement or shape of instructions, timings to be maintained payment function or all of them. by payment systems, manner of funds transfer Under the PSS Act, RBI is the designated criteria for membership including continuation, Authority for regulation and supervision of the termination and rejection of membership, terms Payment Systems and for matters connected and conditions for participation in the payment therewith or incidental thereto. In terms of the system etc. provisions of the Act, no person other than the For operating various Retail Payment Systems in RBI can commence or operate a payment system India, an umbrella organization has been setup, in India unless authorized by the RBI. The namely National Payments Corporation of India RBI is empowered for authorizing, prescribing (NPCI). policies and setting standards for regulating and supervising the payment and settlement systems Current Payment Systems in the country. Any unauthorized operation of a payment system would be an offence under the The Payment Systems currently in use include PSS Act and accordingly liable for penal action clearing of cheques/demand drafts/pay orders, under that Act. money transfers through ECS/NEFT/RTGS, Further, the system provider is required to card operations (Debit/Credit/Pre-paid) through operate the payment system in accordance with ATM/POS/Internet, Mobile Banking, Internet the provisions of the Act and the Regulations, Banking etc., described briefly below: iii 1. Paper Based Clearing – Cheque/DD/ PO ii) Regional ECS (RECS) etc • Operating at 9 centres/locations across the country. RECS facilitates the coverage all • Payment System operated by RBI/ designated core-banking-enabled branches in a State or banks at different locations group of States and can be used by institutions • Membership - Direct/Through Sponsor Bank desirous of reaching beneficiaries within the • Types of Clearing –Non MICR Clearing/MICR state/group of states Clearing/CTS (Cheque Truncation System) • Confined to the bank branches within the jurisdiction of a Regional office of RBI • Pre-requisite: Clearing Membership at the 2. Electronic Clearing Service (ECS) location and CBS iii) National Electronic Clearing Service (NECS) ECS is an electronic mode of payment / receipt for • The centralized version of ECS Credit, being bulk transactions that are repetitive and periodic in operated at Mumbai and facilitates the nature. Once the customer subscribes to the facility coverage of all core-banking enabled branches by giving a mandate (authorization), the funds are located anywhere in the country transferred on the due date from/into the bank • Operated by: National Clearing Cell (NCC) account electronically. ECS is of 2 types – ECS RBI, Mumbai Credit and ECS Debit, briefly described below: • Pre-requisite: Clearing Membership at Mumbai and CBS a. ECS Credit–For affording credit to a large number of beneficiaries (like distribution 3. NEFT and RTGS of dividend, interest, salary, pension, etc.,) having accounts with bank branches at various • One-to-one Inter-bank funds transfer for locations within the jurisdiction of an ECS individuals /corporate Centre by raising a single debit to the bank • Real Time Gross Settlement (RTGS) – Online account of the user institution. transfer during business time. Minimum b. ECS Debit –For raising debits to a large number amount Rs.2 lac. Each transaction payment is of accounts (like payment of telephone/ settled between remitting and recipient banks electricity/water bills, cess/tax collections, loan independently at the time of remittance instalment repayments, periodic investments • National Electronic Funds Transfer (NEFT) – in mutual funds, insurance premium etc.) Remittance in hourly batches during business maintained with bank branches at various hours. No minimum and maximum amount locations within the jurisdiction of an ECS limit. Inter-bank settlements at hourly intervals Centre for single credit to the bank account of • RTGS System is also used by banks for their the user institution. inter-bank settlements for various types of transactions, like: ECS Centres a) Remittances b) Purchase of government securities (through i) Local ECS Clearing Corporation of India Ltd.) • Operating at 81 centres / locations across c) ATM/Micro-ATM/PoS Transactions the country. At each of these ECS centres, (through National Payment Corporation of the branch coverage is restricted to the India Ltd.), geographical coverage of the clearing house, • The System is operated by the National generally covering one city and/or satellite Clearing Cell, RBI, Nariman Point, Mumbai towns and suburbs adjoining the city • Banks have to fulfill terms and conditions • Operated by: RBI/ Designated Banks at prescribed by RBI to become member different locations of the System. Those unable to meet the • Pre-requisite: Clearing Membership at the conditions can become sub-member through location sponsorship by an existing member. iv 4. Card Based Payment System –Credit/ to offer mobile banking after obtaining necessary Debit/Pre-Paid permission from RBI • Provided by: NPCI through its existing NFS switch • Card Payment Network operated by NPCI/ • Pre-requisite – Bank should have mobile Visa/Master Card banking licence from RBI, CBS and Mobile • Pre-requisite: Membership – Direct/through banking application. Sponsor Bank and CBS Electronic Payment Systems have been adopted • The Cards enable the customers to effect quickly by the commercial banks, which has payment through ATMs/Micro-ATMs/Point of brought unprecedented benefits to them. RRBs Sales Terminals (PoS) and Internet have also moved forward with the support of their sponsor banks. SCBs and DCCBs in India 5. Internet Banking, Bills/Taxes Payment have also now embarked upon the mission of and E-Commerce on-boarding the Core Banking Solution and Electronic Card Payment Systems. Some SCBs Customers can use Internet channel for payments. have taken the lead for themselves as well as for Banks provide access to account through Internet the DCCBs under