The need for payments and settlements is as old as the need for goods and

services. The earliest known Payment and Settlement System (PSS) was the barter
system facilitating exchange through goods and / or services. With the concept of
money, people progressed to settling their economic transactions using currency
notes and coins. The evolution of the banking system and advent of bank accounts
led to an easy and safe method for making payments by transfer of money through
bank accounts. This transaction required a payment instrument, and cheque
emerged as the primary instrument for payment transactions. Thus, started the tale
of payment systems.
Settlement Systems
1. Securities Settlement - Clearing Corporation of India Limited (CCIL)
2. Government Securities Segment
3. Forex Segment
4. Forex Forward Segment
5. Rupee Derivatives (IRS) Segment
6. Continuous Linked Settlement (CLS)
7. Directions for central counterparties (CCPs)
Securities Settlement - Clearing Corporation of India Limited (CCIL)
CCIL is a FMI (Financial Market Infrastructure), authorised by RBI under the PSS
(Payment and Settlement Act System, 2007 ) Act to operate various payment
systems and function as a TR. CCIL has been granted the status of a Qualified Central
Counterparty (QCCP) in the Indian jurisdiction.
As a risk mitigation measure, CCIL has constituted the following subsidiaries for
undertaking activities not relating to its role as a central counterparty (CCP):
 Clearcorp Dealing Systems (India) Limited (CDSL) was set up in June, 2003 to
provide dealing systems / trading platforms for repo, tri-party repo, money
market instruments and forex exchange transactions. The subsidiary was set
up to separate the risk bearing activities of CCIL viz., clearing and settlement
from its dealing activities.
 Legal Entity Identifier India Limited (LEIL) was set up in 2015 as a Local
Operating Unit (LOU) for issuing globally compatible LEI in the Indian financial
market.
 Government Securities Segment
The secondary market outright, repo and tri-party repo trades (settlement on T+0 to
T+2 basis) are undertaken on order matching platforms i.e., Negotiated Dealing
System-Order Matching (NDS-OM), Clearcorp Repo Order Matching System (CROMS)
and Triparty Repo Dealing System (TREPS), respectively. Further, OTC trades reported
on NDS-OM and CROMS, are also cleared and settled by CCIL on a ';net'; basis with
CCIL arriving at a single funds and securities settlement obligation for each member
for each settlement date. CCIL acts as a CCP for all trades ensuring guaranteed
settlement with multilateral netting benefits. The funds settlement is through a
settlement bank or RBI, for members maintaining a current account with the
Designated Settlement Bank (DSB) or RBI, as the case may be. With effect from
November 5, 2018, Collateral Borrowing and Lending Obligation (CBLO) was replaced
by tri-party repo under the Securities segment.

Forex Segment
CCIL settles all inter-bank cash, tom, spot and forward USD / INR transactions on
guaranteed basis through a process of multilateral netting. Trades done on Fx-Clear
and Fx-Swap trading platforms as well as inter-bank transactions concluded
bilaterally by clearing participants that are reported to CCIL flow to CCIL's settlement
system. The trades are validated and matched trades that pass an exposure check
are 'accepted' for settlement. Novation occurs at the point in time when the trade is
accepted for guaranteed settlement and the net amount payable to or receivable
from CCIL in each currency is arrived at, member-wise, following the multilateral
netting procedure.
CCIL settles the net positions of the members on a Payment versus Payment (PVP)
basis with the INR leg settled through the member's current account at RBI and the
USD leg settled through CCIL's USD account with its settlement banks.
Forex Forward Segment
Interbank forex forward trades with residual maturity up to 13 months are eligible
for guaranteed settlement under forex forward segment. Forward trades concluded
on Fx-swap trading platform and OTC trades reported by the members flow to CCIL
for clearing and settlement. Two days prior to settlement , i.e., on S-2 day, the net
position of each member is computed for all underlying trades accepted for
guaranteed settlement for the relevant settlement date.
Rupee Derivatives (IRS) Segment
CCIL extends guaranteed settlement of trades in IRS and FRA referenced to Mumbai
Interbank Offer Rate (MIBOR), and Mumbai Interbank Overnight Indexed Swaps
(MIOIS) benchmarks. Instruments covered under IRS and FRA are IRS - fixed float and
basis swaps referenced to MIBOR and MIOIS with maximum maturity of 10 years and
FRA with maximum maturity of 10 years. CCIL also commenced clearing of IRS trades
referenced to MIFOR benchmark with maximum maturity of 5 years from November
19, 2018.
Continuous Linked Settlement (CLS)
CCIL offers non-guaranteed settlement of cross currency transactions through CLS
Bank on a PVP basis. The settlement is through a third party arrangement.
Directions for central counterparties (CCPs)
Directions on governance of domestic CCPs authorised to operate in India by RBI:
Governance provides the processes through which an organisation sets its objectives,
determines the means for achieving those objectives, and monitors performance
against the objectives. To ensure appropriate governance standards in CCPs, RBI
issued directions on the broad principles underlying governance of CCPs covering the
composition of the board, roles and responsibilities of the board, appointment of
Directors, constitution of Committees, etc.
Directions on networth requirements and ownership of CCPs: CCPs should have
sufficient networth to cover potential general business losses and continue to
provide services as a going concern. RBI stipulated a networth of ₹ 300 crore for
authorisation / recognition of any CCP desirous of operating in India. Further, in line
with the Principles for Financial Market Infrastructures (PFMIs), CCPs are required to
hold liquid net assets funded by equity capital equal to minimum of six months of
current operating expenses. With regard to ownership of the CCP, shares of an
authorised CCP can be held only by persons who are users of the authorised CCP.
CCIL is compliant with the requirements laid out for networth and ownership of
CCPs.
 

Payment Systems in India have grown in a manner which is

characterized by a few operators while there is a wide array of payment
systems. This has given rise to certain questions which range largely around
concerns of concentration, need for competition and the resultant impact on
economic efficiency and financial stability. Against this backdrop, the
following issues merit discussion:
(i) multiple and varied retail payment systems being concentrated in a single
entity versus diversification across multiple operators;
(ii) Payment systems managed by a single operator [Unified Payments
Interface (UPI), Immediate Payment Service (IMPS), Aadhaar Enabled
Payment System (AePS), Aadhaar Payment Bridge System (APBS), Bharat
Bill Payment System (BBPS), Instant Money Transfer (IMT)] versus multiple
systems with similar product features offered by different operators;
(iii) Availability of a window for licensing operators of a payment system on-
tap;
(iv) Review of the criteria for licensing, to facilitate innovation and competition
and to broadbase potential applicants.
7. The payment systems of India can be classified as below:
A. Classification on the basis of number of operators
i. Single operator for a single or multiple Retail Payment Systems
 NPCI – National Financial Switch (NFS), CTS, IMPS, UPI-including
Bharat Interface for Money (BHIM), National Unified USSD
(Unstructured Supplementary Service Data) Platform (NUUP), NACH,
AePS, BHIM Aadhaar Pay, APBS, BBPS, National Electronic Toll
Collection (NETC), National Common Mobility Card (NCMC), RuPay
 Empays – IMT
ii. Multiple operators for similar Retail Payment Systems
 Automated Teller Machine (ATM) Networks – 5
 White Label ATM Operators (WLAOs) – 8 non-banks
 Card Payment Networks – 5
 Trade Receivables Discounting System (TReDS) – 3 non-banks
 Prepaid Payment Instrument (PPI) Issuers – 48 non-banks and 60
banks
 Money Transfer Service Scheme – Overseas Principal (MTSS-OP) – 9
non-banks
B. Classification on basis of type of payment service
Although the same payment system can be used for multiple end use
purposes, a broad classification based on the end purpose is as under –
i. Funds transfer and merchant payment systems – IMPS, IMT, UPI, PPI,
Aadhaar based payments, MTSS – cross border inward payments
ii. Card based systems – Card networks, ATM networks
iii. Bulk and repetitive payments, utility payments – NACH, BBPS
iv. Toll collection – NETC
v. MSME receivables’ financing – TReDS
8. NPCI has become an organisation which is pivotal to operations of
many of the critical retail payment systems of the country with
concentration of many tasks. In October 2018, NPCI has processed
nearly 48% of the retail electronic payment transactions (excluding
paper) in volume aggregating to 15% of value of retail electronic
payment transactions.
Roles & Responsibilities of NPCI
a. NPCI owns and operates the Unified Payments Interface (UPI).
b. NPCI prescribes rules, regulations, guidelines, and the respective
roles, responsibilities and liabilities of the  PSPs and TPAP, with
respect to UPI. This also includes transaction processing and
settlement, dispute management and clearing cut-offs for settlement.
c. NPCI approves the participation of Customer Banks, PSP, Third Party
Application Providers (TPAP) and Prepaid Payment Instrument issuers
(PPIs) in UPI.
d. NPCI provides a safe, secure and efficient UPI system and network.
e. NPCI provides online transaction routing, processing and settlement
services to members participating in UPI.
f. NPCI can, either directly or through a third party, conduct audit on UPI
participants and call for data, information and records, in relation to
their participation in UPI.
g. NPCI provides the PSP access to the system where they can download
reports, raise chargebacks, update the status of UPI Payment
Transactions, etc.

9. Concentration of payment system operations within the same entity (or

amongst a few operators) has its benefits and concerns –
Advantages
a. Standardisation: Expertise to facilitate uniform and tested systems and
procedures, including relevant risk management framework and
practices.
b. Economies of scale: Less pressure on capital and infrastructure;
profitability and sustainability of various payment systems enhances.
The size of market in a jurisdiction may not be large enough to sustain
many service providers for similar services. This is also useful where
financial breakeven may take time apart from helping participants
efficiently manage liquidity. There can be advantages on account of
cross subsidisation as well.
c. Oversight and governance: Unity of approach towards regulating and
overseeing a single entity or a small group of institutions.
Disadvantages
 a. Systemic and Operational risk: Possibility of single point of failure and
also makes the entity too big to fail. Absence of redundancy and fall
back arrangements may impact continued availability.
b. Lack of innovation and upgradation: Inadequate competition resulting in
complacency as there is no need for constant upgradation and
innovation in products and processes for retaining the customers.
c. Inefficiencies: Monopolistic trends may negatively impact customers on
charges, access, quality of service, etc.
10. Multi-pronged policy action for a more appropriate level of retail
payment systems and operators
a) Encourage competition and permit multiple entities –
 Pros: Permit multiple entities to provide operations (either for similar
payment services or distributing payment services across multiple
entities) to aid increased competition.
 Challenges: This may require additional investments, creation of
suitable institutional infrastructure and time, and thus may have to be
done in phases. However, even when there are multiple system
providers, the risk of lack of substitution and market failure in a product
may not get addressed because capacity, efficiency, availability,
accessibility of systems and services of different payment service
providers would not be similar. The feature of facilitating inter-
operability would have to be built in the new payment systems being
created.
b) Open and keep-on-tap the window of making applications for all the
payment systems –
 Entry: Permit receipt of applications for all payment systems open on-
tap.
 Exit: Prescription of specific “point of arrival” metrics so that entities
unable to achieve capacity and scale within a defined time-line can
exit.
C) Liberal entry point norms –
 An outline of the existing norms for the major payment systems is
indicated in Annex III.
 Review of the entry point capital (networth) requirement, by a judicious
approach of reduction depending on the risk levels of the respective
system and an analysis of capability-potential of the entities.
 Norms for payment systems like UPI, IMPS, NACH, IMT, etc., as well.
 For all payment systems it would be desirable that they have (a)
physical presence in the country, (b) impeccable track record, and (c)
are likely to conform to the best overall standards including those
pertaining to customer service and efficiency.
d) Alignment of regulatory framework to encourage enhanced participation of
both bank and non-bank entities –
  Bank and non-bank entities can be permitted to offer payment systems
based on their capabilities and potential, risk assessment, etc.

Business Model of Acko

Well, the company goes with a very witty approach of business to consumer
(B2C). The business model of Acko clearly states that the brand reaches the
customers directly and sometimes also through brand partnerships. While it has a
good record of insuring more than 20,000 cars and provides car insurance to
customers in less time, with no paperwork in the purchase, claim, or renewal.
It means no stress and no hassle for insurance-related work. Acko also provides
General insurance, mobile insurance, and bike insurance. Apart from that, the
company also works with third parties to offer micro-insurance for the services of
other brands.
What is unique about the Business Model of Acko?
Acko is not just making you stress-free along with offering better services but also is
providing you comfort with micro-insurance services.
Digital
Well gone are the traditional days because now you can buy the insurance digitally
anywhere at any point in time and that too without any paperwork in less time‌‌Car
insurance and that too digital is like an added advantage for the consumers.‌‌
Innovation
The products are innovative and the technology added to them has a unique offering
such as trip insurance, electronic cover, and hotel-stay insurance with the association
of digital partners.‌‌
Customer-friendly
The brand focuses on the convenience of the customers and offers products that are
customer-friendly.
Just imagine your vehicle got damaged and you get to avail yourself of the services of
Acko. You call Acko support and your damaged vehicle will be picked within an hour.
The vehicle will be repaired in 3 days or they will also provide you with cab services.
Isn’t it amazing? No other brands offer these facilities and an easy car insurance
process. So, the customer stays satisfied as they live with ease and no worrying
about the problems.
How does Acko Make Money?
Acko also has got several customer-friendly schemes which is the way the company
is making money. As a digital insurance platform, it provides services that are cost-
effective in terms of other brands and also of better quality. Also, when it comes to
the direct-to-consumer approach, there happen to be no middlemen which
eventually makes a way for making extra profit.
The company has also gained the trust of its customers and has availed high ratings
through its customers. The customer support facility provided by Acko has also
assisted in getting more appreciation from the customers and ratings too, eventually
paving a way for more money acquisition and revenue.