A

PROJECT REPORT
ON

BANKING PAYMENT AND SETTLEMENT SYSTEM

BACHELOR OF COMMERCE IN BANKING AND INSURANCE

(SEMESTER V)

Under the Guidance of

PROF. REYANA VALEJA

Submitted

In Partial Fulfillment of the requirement for the Award of the degree

of Bachelor of commerce in Banking and insurance

Submitted by,

PRATIK SHIVRAM GOTARNE

ROLL NO. 1728008

SHRI SIDH THAKURNATH COLLEGE OF ARTS & COMMERCE

ULHASNAGAR 421 004

UNIVERSITY OF MUMBAI 2017-2018

 DECLARATION

I, PRATIK SHIVRAM GOTARNE student of TYBCBI (Bachelor of

Commerce in Banking and Insurance Management) hereby declare that
I have completed the Project on BANKING PAYMENT AND
SETTLEMENT SYSTEM in the academic year 2017-18.
The information submitted is true and original to the best of my
knowledge.

PRATIK S GOTARNE.

{T.Y.BBI}
 ACKNOWLEDGEMENT

My project is a result of the inspiring and thoughtful guidance and

supervision of my project guide PROF. REYANA VALEJA I am deeply
indebted to her whose help, time, support, inspiration, stimulating
suggestions and encouragement helped me in all the times of research
and writing of this report.
This project has widened my horizon to various areas under
general knowledge regarding the practical and real aspects of BANKING
PAYMENT AND SETTLEMENT SYSTEM".
I whole heartedly thank all the concerned people at college as well
as at university level, who have given me the chance for preparing this
valuable project.
I would further like to thanks our Principal Sir Dr. J.C. Purswani
for giving me an opportunity to complete our Project
Last but not least, this Project has definitely helped me to achieve
something which will be useful to us in near future and hence I am
thankful to all persons who have helped in knowledge.
 EXECUTIVE SUMMARY
A Payment System is a mechanism that facilitates transfer of value
between a payer and a beneficiary by which the payer discharges the
payment obligations to the beneficiary. Payment system enables two-way
flow of payments in exchange of goods and services in the economy.
Electronic Funds Transfer (EFT) is a system whereby anyone who
wants to make payment to another person / company etc. can approach his
bank and make cash payment or give instructions / authorization to transfer
funds directly from his own account to the bank account of the receiver /
beneficiary.
Electronic Clearing Service (ECS) is a retail payment system that can
be used to make bulk payments / receipts of a similar nature especially
where each individual payment is of a repetitive nature and of relatively
smaller amount. This facility is meant for companies and government
departments to make/receive large volumes of payments rather than for
funds transfers by individuals. The ECS facility is available in 47 centers
across India operated by RBI at places where it manages the clearing houses
and by SBI and its associates in other centers.
Real Time Gross Settlement (RTGS) system, introduced in India since
March 2004, is a system through which electronic instructions can be given
by banks to transfer funds from their account to the account of another bank.
The RTGS system is maintained and operated by the RBI and provides a
means of efficient and faster funds transfer among banks facilitating their
financial operations. As the name suggests, funds transfer between banks
takes place on a real time basis.
 Cheque Truncation is a system of cheque clearing and settlement
between banks based on electronic data/images or both without physical
exchange of instrument
 INDEX

SR. TOPIC NAME PAGE

NO. NO.
1. INTRODUCTION 1-2

2. EVOLUTION OF PAYMENT SYSTEM IN INDIA 3-5

3. OBJECTIVES OF THE PAYMENT SYSTEM 6

4. THE ROLE OF THE RBI 7-8

5. CHEQUE 9-10

6. CHEQUE TRUNCATION SYSTEM (CTS) 11-13

7. CHEQUE TRUNCATION MODEL FOR INDIA 14-15

8. NATIONAL ELECTRONIC FUND TRANSFER 16-19

9. OPERATION OF ELECTRONIC FUND TRANSFER 20-21

10. EFTPOS 22-27

11. REAL TIME GROSS SETTLEMENT SYSTEM 28-32

12. RTGS IN INDIA 33-36

13. ELECTRONIC CLEARING HOUSE 37-46

14. THE CHALLENGES AHEAD 47-48

15. QUESTIONNAIRE 49-50

16. SURVEY REPORT 51-54

CONCLUSION 55-56

QUESTIONNAIRE 57