MODULE 4

Payment and Settlement System-National

Gateways

National Electronic Fund Transfer (NEFT)

 National Electronic Funds Transfer (NEFT) is a
nation-wide payment system facilitating one-to-
one funds transfer.
 Under this Scheme, individuals, firms and
corporate can electronically transfer funds from
any bank branch to any individual, firm or
corporate having an account with any other
bank branch in the country participating in the
Scheme.
 Even such individuals who do not have a bank
account (walk-in customers) can also deposit
cash at the NEFT-enabled branches.
 There is no limit – either minimum or
maximum – on the amount of funds that could
be transferred using NEFT. However,
 maximum amount per transaction is limited to
Rs.50,000/- for cash-based remittances within
India and also for remittances to Nepal under
the Indo-Nepal Remittance Facility Scheme.
 Presently, NEFT operates in hourly batches –
there are twelve settlements from 8 am to 7 pm
on week days (Monday through Friday) and six
settlements from 8 am to 1 pm on Saturdays.
Real Time Gross Settlement (RTGS)
RTGS is a large value funds transfer system
whereby financial intermediaries can settle
interbank transfers for their own account as well as
for their customers. The minimum value of
transaction in RTGS system is Rs 2,00,000.
 The acronym ‘RTGS’ stands for Real Time
Gross Settlement, which can be defined as the
continuous (real-time) settlement of funds
transfers individually on an order by order basis
(without netting). ‘Real Time’ means the
processing of instructions at the time they are
 received rather than at some later time; ‘Gross
Settlement’ means the settlement of funds
transfer instructions occurs individually (on an
instruction by instruction basis).
 Considering that the funds settlement takes
place in the books of the Reserve Bank of India,
the payments are final and irrevocable.
 The RTGS system is primarily meant for large
value transactions. The minimum amount to
be remitted through RTGS is 2 lakhs. There
is no upper ceiling for RTGS transactions.
 The remitting bank receives a message from the
Reserve Bank that money has been credited to
the receiving bank. Based on this the remitting
bank can advise the remitting customer through
SMS that money has been credited to the
receiving bank.
 The RTGS service window for customer’s
transactions is available to banks from 9.00
hours to 16.30 hours on week days and from
9.00 hours to 14:00 hours on Saturdays for
settlement at the RBI end. However, the timings
 that the banks follow may vary depending on
the customer timings of the bank branches.
Thus, Real-time gross settlement (RTGS) is the
continuous process of settling payments on an
individual order basis without netting debits with
credits across the books of a central bank (e.g.,
bundling transactions). Once completed, real-time
gross settlement payments are final and
irrevocable
The customer initiating the funds transfer through
RTGS has to have the Indian Financial System
Code (IFSC) of the beneficiary's bank, along with
the name of the beneficiary, account number and
name of the bank. The bank branches, both at the
initiating and receiving end, have to be RTGS-
enabled for the transaction to be processed.
Customers with Internet banking accounts can do
RTGS transactions on their own.

Difference between NEFT and RTGS

NEFT is an electronic fund transfer system that
operates on a Deferred Net Settlement (DNS) basis
which settles transactions in batches. In DNS, the
settlement takes place with all transactions received
till the particular cut-off time. These transactions
are netted (payable and receivables) in NEFT
whereas in RTGS the transactions are settled
individually. For example, currently, NEFT
operates in hourly batches. Any transaction
initiated after a designated settlement time would
have to wait till the next designated settlement time
Contrary to this, in the RTGS transactions are
processed continuously throughout the RTGS
business hours.

NEFT vs RTGS
There are various differences between NEFT and
RTGS. We will study it on the basis of various
basis, which is as follows:
1. Need for Bank Account
Customers who have savings or current A/c are
eligible to avail NEFT/ RTGS services. For the
individuals who do not have a bank account, there is
a cash deposit facility at the NEFT-enabled
branches. However, there is a restriction
of Rs. 50,000 per transaction.
2. RTGS Timings and Neft Timings
The RTGS facility is available from 8 am to 16:30
pm on weekdays and working Saturdays. In the case
of NEFT, there are 12 settlements from 8 am to 7
pm. However, these timings are subject to changes
on the basis of the customer’s general routine of
availing the services.
A customer can avail service of Online RTGS only
within the mentioned cut off time. In case of online
NEFT, if the transaction is beyond the specified
time then the funds will be transferred to the
beneficiary bank on the next working day.
3. Minimum Amount
RTGS facility is meant for large amount
transactions. For retail customers, the minimum
amount of transfer through RTGS is Rs. 2 lakh.
There is no minimum requirement of the amount in
case of NEFT.
4. Failure of E-transaction
In RTGS transactions, if due to any reason – such as
when the account does not exist or is frozen – it is
not possible to transfer the funds to the beneficiary
customer’s account, the money is credited into the
sender’s account once the bank receives the money
back. The amount is returned to the originating bank
account within one hour or before the end of the
RTGS business day, whichever is earlier.
In NEFT transactions, destination banks are
required to return the fund to the originating branch
within 2 hours of completion of the batch in which
the transaction process is done.
Question: What are the charges under RTGS and
NEFT?
Answer: In NEFT, charges don’t exceed Rs. 25
(excluding service tax) per single transaction while
for RTGS it does not exceed Rs. 55 (excluding
service tax). These charges are typically lower in
case of internet banking as compared to the
transaction through bank branches.
DIGITAL FINANCIAL SERVICES (DFS)
Definition. The broad range of financial
services accessed and delivered
through digital channels, including payments,
credit, savings, remittances and insurance.
The digital financial services (DFS) concept
includes mobile financial services (MFS).
The solution can be summed up in two
words: digital finance, the idea that individuals
and companies can have access to payments,
savings, and credit products without ever stepping
into a bank branch. ... Digital dramatically lowers
the cost of providing financial services
Application of Digital Financial Services

In today's world, everything is digitized, which

means we can access or get every service in digital
format through mobile phones, computers, tablets,
etc. The invention of computers and smartphones
has created a huge impact on financial services.
Today using computers and mobile phones, a
person can access his/her bank account, verify
account details, transfer funds, deposit cash, renew
deposit, pay bills, book tickets, etc. Also, the
invention of ATMs reduced the time taken to
withdraw money from banks. Digital services help
to save time by providing services in a single
touch. The introduction of digital wallets has also
made a big positive impact on financial services.
In this topic, we are going to discuss in detail the
importance of savings, importance of bank,
banking products like accounts, deposits, loans,
procedure for opening an account, banking
services through a bank branch, ATM, internet
banking, mobile banking, mobile wallets,
insurance and various schemes introduced by the
Prime Minister of India.
UPI :
A Unified Payment Interface (UPI) is a smartphone
application which allows users to transfer money
between bank accounts. ... The Unified Payment
Interface is a real-time payment system. It is
designed to enable peer-to-peer inter-bank transfers
through a single two-click factor authentication
process.
1) So, What Is UPI?
The Unified Payment Interface (UPI) can be
thought of like an email ID for your money. It will
be an unique identifier that your bank uses to
transfer money and make payments using the IMPS
(Immediate Payments Service). IMPS is faster than
NEFT and lets you transfer money immediately and
unlike NEFT, it works 24×7. This means that the
online payments will become much easier without
requiring a digital wallet or credit or debit card.

2) Who is behind UPI?

Unified Payment Interface is an initiative by
National Payments Corporation of India’s (NPCI),
set up with the support of the Reserve Bank of
India and Indian Banks Association (IBA). The
NCPI operates the Rupay payments infrastructure
that – like Visa and MasterCard – allows different
banks to interconnect and transfer funds.
IMPS (Immediate Payments Service) is also an
initiative of NCPI. UPI is the advanced version of
IMPS.

3) How Does UPI Work?

Currently, if you want to make a bank payment
online, you have to enter their account number,
account type, Bank name and IFSC code. Even if
you have all these details, typing it all in,
particularly on a phone, is a painful process. Most
banks take upto 12 hours to add a new payee and
only then you can make the transfer.
The idea behind the UPI is to do away with all of
this. The interface will allow account holders
across banks to send and receive money from their
smartphones using just their Aadhaar unique
identity number, mobile phone number or virtual
payments address without entering bank account
details.
According to NPCI, so far only 29 banks have
agreed to start this service. If your bank is UPI-
enabled, you can ask it to connect you to the
system. To initiate a transaction, you can use two
types of address—global or local. Global address
includes your mobile, Aadhaar and bank account
numbers. A local address can be a virtual address.
Let’s say your bank gives you a virtual ID similar
to your email ID (for instance,
name@companyname). This virtual address will
allow you to send and receive money from multiple
banks and prepaid payment issuers.
So, you will no longer need to use a particular app
to send and receive money. For example, if you use
a taxi service, at the end of the journey you just
have to give your virtual address and the driver will
request money from it. You will get a message on
your mobile phone asking for authentication. Once
you authenticate the transaction by entering your
password, it will be complete. This process doesn’t
require either the driver or you to share bank
details. Since UPI runs on IMPS, the service will be
available real time and 24X7.
Nandan Nilekani, man behind Aadhar and now an
advisor to NPCI, said: “UPI is a layer we have put
on IMPS. It (IMPS) didn’t really have the easy
debit capability and that has been addressed by this
platform. We think with UPI coming, it is going to
be an important merchant platform. Once it is
adopted by all banks, money can be transferred
from a bank to any other bank using a mobile
phone”.
4) What I can do with UPI?
UPI will simplify your online payments. Now, we
have to use NEFT, IMPS or a digital wallet such as
MobiKwik or Paytm to make a quick payment to
the service providers. With the UPI, you simply
need to enter your details, and get a billing request
on your phone – which you can accept or reject
right away.
Taxi aggregators like Uber and Ola, food ordering
services like Zomato and Food Panda, online
grocery shops like Big Basket will be able to take
advantage of the UPI system. Going forward, such
companies should be able to register its identifier
on the UPI system and receive funds from a
customer’s bank account through the UPI. Most of
the similar tech companies are now banking on
mobile wallets.
Apart from this, you can send money to your
family and friends instantly.
5) What will happen to mobile wallets?
This is a burning question asked by most of the
industry watchers every since UPI was launched.
Mobile wallet companies were worried and there is
a reason for that.
The RBI has allowed only banks to become
Payment Service Providers of UPI service, keeping
mobile wallets out of the service. So, UPI has come
as a boon for banks which were loosing ground to
mobile wallets like PayTM, Freecharge, Mobikwik,
Oxigen and Citrus Pay. Though mobile wallets
have been urging the banking regulator to include
them as service providers, it has not relented so far.
I think popular mobile wallets like PayTM that
have good customer base can still keep using it for
quick recharges and movie tickets. Cashback offers
can keep them hooked to the platform little longer.
Check out some reactions from the majoj wallet
companies:
“The Unified Payments Interface augurs well for
us. MobiKwik already has millions of users paying
their bills using the wallet,” says Bipin Preet Singh,
Founder and CEO MobiKwik. “The convenience,
security, and speed that we offer to users keeps
bringing them back to the platform. With the
Unified Payments Interface in place, our
expectation is that we would unlock a new channel
for growth since the universe and reach would
enlarge.”
Govind Rajan, COO FreeCharge, said “We don’t
want people to keep money in the wallet, we want
them to use us as a processor,” he says. “That will
happen because of the security and speed we can
provide, so the more options there are for people
the better. We’re not competing with other wallets
or digital systems – right now, the challenge is to
take on cash.”
Naveen Surya, Chairman, Payment Council of
India & MD, ItzCash, said “We are very excited
and thrilled with the possibilities of envisioning a
simplified and frictionless payments infrastructure
with the launch of UPI. All our non-bank members
await directions from RBI and NPCI to get ready
access and we can surely deliver high digital
payments growth as in case of IMPS transactions.”
One thing is sure that unless these wallet
companies come up with an innovative way to stay
relevant, its going to be an uphill task for them to
survive.

6) What about Payment Gateways?

So, we have CCAvenue, EBS, Instamojo and
various other payment gateways in India. Question
is, what will happen to these payment gateways
once UPI is in full force.
Job of these payment gateways is to aggregate
various payment methods like Credit cards, debit
cards, mobile wallets and netbanking. So, the UPI
might become the new net-banking, by replacing it
as a payment mode. I
These payment gateways also offer detailed
information on received payment (who paid & for
what), apart from providing transaction
management, reconciliation, insights etc. They also
offer customisation at every level (payment
options, payment page, etc) which is beyond a
simple push-n-pull movement of money via UPI.
Most importantly, Payment Gateways act like a
trust custodian — one who provides protection
against any dispute between merchant & consumer.
This is completely missing in UPI today but it will
be there as the platform matures.

7) How secure is UPI?

Nilekani said the security is fool-proof as the
transaction will happen in a highly encrypted
format. Already NPCI’s IMPS network handles
more than Rs.8,000 crore worth of transactions a
day, which will exponentially increase with the use
of mobile phones.
2 Factor authentication – similar to OTP will be
there as its mandated by RBI. In this case, MPIN
instead of OTP will be used.

8) Is UPI available now for me to use?

It was announced in Jan 2016 and made available
to banks starting 11 April 2016. However, its still
in nascent stage and it will take banks little more
time to figure it out and add support for it in their
mobile app.
“Some banks have gone live with UPI out of 29
banks that had concurred to provide UPI service to
their customers. We are confident that several
banks will join UPI this year and the number will
multiply further. Our focus is in line with the RBI’s
vision of migrating towards a ‘less-cash’ and more
 digital society,” said AP Hota, MD & CEO of
NPCI.
Flipkart bought PhonePe which is said to be
working on a product based on UPI mechanism.
Snapdeal already has FreeCharge under its wings
and Amazon could make its move in the coming
months. At ProfitBook, we are also planning to
integrate UPI soon with our accounting software.

How to Send and Receive Money via UPI?

1. Login to your bank's UPI-enabled mobile
application.
2. Go to UPI section.
3. Click on Make Payment/Send/Pay.
4. Enter the payee's Virtual Payment Address
(VPA)
5. Enter the amount to be transferred.

Find your UPI ID. UPI is a banking system for

money transfers on payment apps. To add a bank
 account to Google Pay, your bank must work
with UPI. Your UPI ID is an address that identifies
you on UPI (typically yourname@bankname).
Best UPI Apps in India
1. PhonePe. PhonePe is one of the leading UPI
apps in India. ...
2. Paytm. Paytm is the most popular digital wallet
and UPI app in India and is accepted by the most
number of merchants. ...
3. MobiKwik. ...
4. Google Pay (previously Google Tez) ...
5. BHIM SBI. ...
6. Kotak 811.

UPI ID is automatically generated for you when

you create a Google Pay account using your bank
credentials. You can change your UPI ID by
claiming 2 more IDs from the bank. There is no
way to customize it.
A digital wallet also known as "e-Wallet" refers to
an electronic device or online service that allows
an individual to make electronic transactions. This
can include purchasing items on-line with a
computer or using a smartphone to purchase
something at a store.
13 Electronic Wallets Advantages and
Disadvantages

An electronic wallet, sometimes called a “digital

wallet” or “e-wallet,” is an electronic version of a
payment card which is authorized to conduct
transactions on your behalf. These wallets are
usually on a mobile device, such as a smartphone,
though desktops and laptops can hold an electronic
as well.
Electronic wallets must be linked to specific debit
or credit cards to operate properly. There may be a
requirement to link the e-wallet to a bank account
as well. Then, through the use of information and
software, consumers can use their electronic wallet
to pay for items instead of carrying a physical
wallet to pay with a card.
There are several advantages and disadvantages of
electronic wallets to examine if you’re thinking
about embracing this technology.
List of the Advantages of Electronic Wallets
1. It offers more convenience for many
consumers.
When you’re carrying an electronic wallet, you get
to limit the number of cards you carry when you
travel. You no longer have the requirement to carry
a lot of cash with you either. All you need to do is
tap your device to the payment receptacle, or have
your mobile device scanned, to pay for the items
you are purchasing. That means you’re no longer
carrying a pocketful of items wherever you go.
2. It provides access to other types of cards.
Electronic wallets typically store credit cards and
debit cards. They can be used for a wide variety of
cards, however, if the provider is compatible with
the wallet you are using. That means you can store
rewards cards, loyalty cards, and even coupons
within your digital wallet, allowing you to enjoy
more of a paperless lifestyle.
3. It offers more security.
If you have a wad of cash in your pocket that gets
lost, you have zero options available to you to
recover your funds. Losing your credit cards means
you must contact each lender to cancel each card,
then have a new one issues. With an electronic
wallet, the information is stored through a third-
party provider. It’s locked behind your password or
biometrics. Even if you lose your device, you’ll
still have access to your e-wallet once you get a
new device.
4. It can be used at most retailers and online
stores.
Electronic wallets have become widely accepted
within the past few years. Most locations that
accept cards as a payment option will allow you to
pay with your electronic wallet. Although there are
still some locations that are using older processing
technologies, which does limit some product or
service access, the number of retailers who provide
payment access in this manner continues to
increase each year.
5. It requires users to authorize every transaction.
Electronic wallets function like a debit card when
initiating a transaction. They require you to input
your PIN to authorize payment. For devices with
biometrics, a payment would require your
fingerprint to authorize it. That gives you another
layer of security against unauthorized purchases or
the financial risks associated with identity theft.
6. It may offer access to new rewards.
Many electronic wallets offer incentives to
encourage consumers to use them instead of
traditional payment methods. You may find
discounts apply to certain purchases, such as fuel,
food, or travel. Some businesses may work with
your e-wallet provide to offer specific discounts as
well. That means you have the potential to save
money without changing your spending habits.
You’re just changing how you pay for those items.
7. It could help you with your budget.
Many electronic wallets can help you track your
spending habits. Some may generate reports that
show you specific categories of spending. You can
also assign fixed budgets to specific cost categories
to ensure that you’re not spending more than you
should on certain items. If you have a big-ticket
item to purchase, however, you can disable this
feature to make sure there’s enough money
available to make the payment.
List of the Disadvantages of Electronic Wallets
1. It is not fully available worldwide.
The number of retailers which accept payments
from an electronic wallet depends on the actual
wallet you choose. In December 2016, just 36% of
retailers accepted Apple Pay. 34% of retailers
accepted PayPal as a form of payment. Just 25% of
retailers accepted MasterPass. About 2 million
retailers in North America currently provide access
to some form of mobile payment through an
electronic wallet.
2. It still requires you to carry something.
Although an electronic wallet offers more
convenience for many consumers, it doesn’t fully
eliminate the requirement of carrying something
with you. If you don’t have your mobile device on
your person, then you have no way to complete a
transaction. Because these wallets don’t store your
identification and other needed items, you’re still
forced to carry a traditional wallet or purse with
you as well.
3. It requires your device to have a charge.
There’s also the disadvantage that an electronic
wallet requires you to have a charged device to
have it operate. If you’re carrying a traditional
wallet, you won’t need to worry about how much
battery life is left on your phone.
4. It doesn’t eliminate your security risks.
The security of your smartphone or mobile device
is dependent on the settings you use. If you don’t
have your device protected with some type of
password, then someone could steal your device
and potentially access the funds in your bank
account or credit cards. There are definite security
advantages to consider which make an e-wallet a
beneficial technology, though it requires
responsible management of it to maximize them.
5. It may charge you more to process payments.
Many of the electronic wallets which offer a
rewards program will charge you a fee to transfer
those rewards. You may be required to process
payments in a specific way to access these benefits
as well. When using the PayPal debit program, for
example, consumers receive 1% cash back when
their transaction is a standard signature credit
transaction. Using a PIN through a digital wallet
eliminates this benefit because you’re changing
how the point-of-sale treats the transaction. If you
spend $900 per month, you’d be losing over $100
each year for the convenience of this payment
method.
6. It could encourage reckless spending.
When money is electronically-based instead of a
physical item, some people struggle with their
spending habits. The money doesn’t feel real, so
proper budgeting doesn’t take place. If you are
already struggling to maintain a budget with a
traditional wallet, then an electronic wallet might
make that issue even worse.

These electronic wallet advantages and

disadvantages show that this technology makes it
faster and easier to complete a transaction.
Although there are some accessibility issues to
consider, for the most part, the use of a digital
wallet is a convenient option for many people.
Definition of 'E-wallets'

Definition: E-wallet is a type of electronic card

which is used for transactions made online through
a computer or a smartphone. Its utility is same as a
credit or debit card. An E-wallet needs to be linked
with the individual’s bank account to make
payments.

Descriptions: E-wallet is a type of pre-paid

account in which a user can store his/her money for
any future online transaction. An E-wallet is
protected with a password. With the help of an E-
wallet, one can make payments for groceries,
online purchases, and flight tickets, among others.

E-wallet has mainly two components, software and

information. The software component stores
personal information and provides security and
encryption of the data. The information component
is a database of details provided by the user which
includes their name, shipping address, payment
method, amount to be paid, credit or debit card
details, etc.

For setting up an E-wallet account, the user needs

to install the software on his/her device, and enter
the relevant information required. After shopping
online, the E-wallet automatically fills in the user’s
information on the payment form. To activate the
E-wallet, the user needs to enter his password.
Once the online payment is made, the consumer is
not required to fill the order form on any other
website as the information gets stored in the
database and is updated automatically.
Digital Wallets: Types, Ideas, and Future of
Such Products
E-commerce is starting to pick up and gather pace,
and, in this regard, digital payment services are in
increasing demand. And where there is demand,
supply is also required. Why not provide it? In
other words, now is the high time to make wallet
apps.
Why now? The reason is simple! Mobile & online
digital wallets are a relatively new concept, they are
only at the beginning of their journey, and a great
future is undoubtedly awaiting them. And you need
to catch your niche in the market while there is still
a chance to become a leader. By the moment the
number of competitors increases, you'll have
already gained a strong position.
So, how to develop an e-wallet app? And what’s an
e-wallet in the first place?
What is the e-wallet app?
According to statistics, electronic payment services
take second place in popularity.
Mobile Wallets
Mobile wallet is a virtual wallet, which stores your
credit or debit card information. Instead of
physically carrying card, we can use mobile
device. Mobile wallet also helps to store driver's
license, social security number, health information
cards, loyalty cards, hotel key cards and bus or
train tickets.
This is the data of 2017, and since then the demand
for e-payment services and digital card wallets has
been growing, as the following statistics show.
As we’ve said, such demand is due to the rapid
development of e-commerce. Confirmation is
another infographic.
Here a natural question arises: how is e-commerce
related to e-wallet payment? Or what is an
electronic wallet in e-commerce? Why do we need
to create e-wallet at all?
We hope our article will cover the issue in detail,
but for now, we'll answer briefly: iOS and Android
digital wallet apps are an important tool helping to
interact with the customer in a more efficient way.
You simplify the payment system to the user, thus
showing you are valuing his time, taking care of
him.
But let's consider such a type of mobile payments at
length.
What’s an e-wallet?
In fact, we're talking about a program which allows
the user to store electronic money (and manipulate
them). It’s a type of digital currency for online
transactions via a desktop or smartphone.
But before taking advantage of his e-wallet, a user
must select a digital payment system which is a
type of pre-paid and password-protected account
for storing the money for any future online
transaction. It is to this account that the client
should connect payment cards.
The online e-wallet has basically two components:
 The software component ensures security and
strong data encryption.
 The information component is a database
containing personal user data (name, card details,
payment options, and so on.
Where and when can one use e-wallet mobile
payments?
If you want to convince the person to install
your digital wallet app, if you want him to create
payment links and perform other similar actions,
you must explain to him where and when he may
take advantage of e-payment services.
First of all, where can you use payment cards?
Almost everywhere, right? The same applies to
various types of e-wallets, only with additional
benefits (which we'll discuss later in due course).
So today an e-wallet app is an ideal payment tool,
and those who spend money on the Internet are
very fond of it.
It allows making online purchases, booking flights,
getting loans, and the like. Subsequently, such
virtual money is easily and simply converted into
real assets and withdrawn either to a bank account
or to a plastic card.
Cryptocurrency mobile wallet apps
A cryptocurrency is a form of electronic money
which has been incredibly popular lately
(especially bitcoins, they have won the greatest
glory). And since any cryptocurrency is virtual
(you can't touch it with your hands!), you also
need electronic wallets. Otherwise, you won’t be
able to manage such funds.
In fact, bitcoin is being stored in the blockchain
network, not in the cryptocurrency wallet itself.
The wallet only contains private and public keys
and makes it possible to work with them.
Cryptocurrency wallets are divided into several
types:
 Desktop wallets, they’re accessible only from
the computer on which they are installed. They
provide sufficient data security, although when
 hacking a computer (or if it's been infected with a
virus) there is a chance of losing all means.
 Hardware wallets which are similar to
previous ones but using a hardware data storage
device (USB or something of the sort).
 Online digital wallets. Their work is based on
cloud storage technology. As you understand,
there are some drawbacks in the cloud-focused
approach (like a greater risk to have information
stolen), although there are also benefits: let's say,
the accessibility (namely, the possibility to use
these wallets anywhere, from any device).
 Mobile digital wallets, they work as an
application on the mobile device. The advantages
are undeniable, you’re even allowed to use such
wallets in retail outlets.
 Paper wallets, they provide the highest level of
security but are not always convenient to use.
There are e-wallet apps focused only on a particular
type of currency, but there are also those which
allow making any type of mobile payments. You
have to take it into account when choosing a digital
payment system we've talked about earlier.
Wondering how to makOur article is covering
the issue!
Digital wallet benefits
Now that you understand the essence of the e-
wallet, how to use it, it's time to discuss its benefits.
You should know them to promote the product
more effectively.
Electronic payment services are, relatively
speaking, card-based payments since the user
should link a credit card to the app. But in the case
of e-wallet apps, there are a number of additional
benefits which common payment cards don’t have.
So let’s discuss electronic wallets advantages and
disadvantages.
Main benefits
1. Simplified payment process. With the
online e-wallet, the user can very quickly pay
for the service or product in the online store. As
you know, payment with a plastic card involves
a much more complicated process, since it’s
necessary to enter the card number, CVV code,
etc.
2. Unlimited period of use. Once the user has
registered an account in the system of electronic
payment services, he may use it as he likes, for
a really long time.
3. Convenient work in the online
mode. Paying with electronic money is the best
solution for freelancers who deal with clients
online.
4. High transaction speed. Bank transfers
sometimes take from several hours to a few
business days. Transactions with electronic
money are performed in a matter of minutes.
 5. Extended payment functionality. Digital
wallet features are:
a.a highly protected user account with all the
necessary information for making a
secure e-wallet mobile payment;
b. the ability to select the desired currency
(ideally, the list should offer cryptocurrency
either);
c.the possibility of convenient funding of the
e-wallet (or withdrawal of funds from it).
Disadvantages of e-payment services
Disadvantages include:
 mandatory Internet access;
 the low probability of hacking the digital card
wallet. However, the security issue will be
discussed separately because it deserves more of
our attention.
Types of e-wallets by delivery technology
There are different ways to classify online payment
services, and we'll consider one of them a bit later
while discussing the e-wallet operation scheme. In
the meantime, we'd like to talk about classification
by delivery technology.
NFC technology
NFC means Near Field Communication. The
essence of technology lies in the simple data
exchange between closely located devices: between
a credit card/smartphone and reading terminal and
so on.
In fact, we're talking about the contactless payment
which allows us to pay using a smartphone -
instead of payment cards. Striking instances are
Samsung Pay, Android Pay, Apple Pay.
Pros:
 Intuitive design.
 Easy connection to the ecosystem of e-payment
services.
 High level of security.
Cons:
 Terminals (or other similar devices) must be
equipped with an NFC component.
By the way, Near Field Communication is also
good at transferring funds (by touching a
smartphone to a smartphone).
Optical/QR code
Here we’re implying at cloud-based technology
which uses QR code generated by client’s gadget or
merchant’s sales outlet.
Thanks to the QR-coding system, customers’re able
to make purchases and payments through a mobile
gadget almost everywhere, online and offline: in
Internet shops, cafes, and restaurants, in taxis and
retail outlets.
Among the examples worth mentioning are
WeChat Wallet, Starbucks mobile payment, and
Walmart Pay.
Pros:
 There are a great many barcode readers in the
store units.
 Entering mobile payments via a card reader is a
really simple process requiring no extra effort.
Cons:
 Security isn’t high enough.
 Lack of a global payment ecosystem.
Digital Delivery Technology
As you understand from the name, such digital
wallets are focused on payment for goods and
services on the Internet. In the outlets of the real
(non-virtual) world, these applications can be used
in rare cases and only under certain conditions.
Best digital wallets of this type include Alipay,
PayPal, Pay with Amazon.
Pros:
 Easy to install and use.
Cons:
 It’s harder to pay in real stores.
SMS-based payment
In this case, the account is managed using SMS
commands (to confirm payment). The method is
good for P2P marketplaces, C2B real-world
transactions, etc. Examples are Mobile Money,
Orange Money, Tigo.
Pros:
 The possibility not to leave the seller’s site
(application) while making payment;
 You can do without Internet access in real-
world conditions (say, at some gas stations you
can inform the operator about the phone number
and payment confirmation code, and such
information would be enough to pay).
Cons:
 Fairly limited platform type, not flexible
enough.
Among the projects in our portfolio is Wirex
banking app with various useful e-wallet
features. Wann?
How do digital wallets work?
Unlike traditional pocket wallets, mobile and online
e-wallets don't store currency (or rather, don't store
physically). All that really exists is transaction
records.
As you already understood, the electronic payment
services usually work using the application
installed on the user's smartphone (that's why you
should create the e-wallet app). Further, the scheme
of work depends on the delivery technology we've
considered earlier and the type of mobile wallet
apps.
Remember, we promised to talk about another
classification method? The time has come!
 The closed type. Imagine a company selling
goods or providing services which decided to
make an online wallet app for its customers. And
 these customers will be able to use such a wallet
only in its stores (or salons, whatever!). Say,
Walmart Pay, we've mentioned while describing
delivery technology, is designed exclusively for
the Walmart network.
 The half-closed type. With the half-closed
type, the situation is better. Users can take
advantage of these e-wallet apps when served in
certain sales outlets - those which have signed an
agreement with the provider for the payment
instruments provision. However, the e-wallet
coverage area is still rather limited.
 The open type. It's quite simple: these iOS and
Android digital wallets are freely used to pay for
goods and services (including financial ones),
withdraw and transfer funds, etc.
Best digital wallets as an example
And now it's time to talk about your competitors.
Alas, you’re not the first to think about the mobile
wallet development, and you need to know who
managed to win their place in the sun.
Let’s analyze the top list of mobile wallets.

As you see, the most popular rival is PayPal.

Nevertheless, we’d like to consider a couple of less
obvious, but also worthy examples of digital wallet
apps - those which is in high demand among
consumers. Such as…
PAYEER

Payeer is a very popular payment system created in

2012. It’s in demand among users who wish to deal
with electronic money in the most anonymous
mode. The system is easy to use, well-protected
and works quickly.
Benefits:
 more than 15 million users;
 optional account verification;
 no limits;
 150+ ways to add funds to the digital card
wallet;
 operations with zero commission worldwide;
 mass payments through the API without
restrictions;
 high level of anonymity;
 no locking user wallets.
ePayments
ePayments is oriented on e-payment services and
was created in 2011. It boasts a client base of 500
thousand users from more than 100 countries.
Benefits:
 processing 100 million transactions per year;
 the official website, personal account, and
mobile application are available in 5 language
versions;
 replenishment of the cash balance with
cryptocurrency, bank transfers, payment systems,
and plastic cards;
 funds withdrawal (to ePayments card, to a
VISA, Mastercard or Maestro bank card, to a
bank account) is possible even for unverified
users;
 convenient mobile payment app available for
iOS and Android.
Perfect Money

Perfect Money is a digital system focused on online

and mobile cashless payments. It was founded in
2007 and has a great number of proper e-wallet
features. Among other things, it allows receiving,
depositing, and withdrawing funds completely
anonymously (that is, user identification isn’t a
prerequisite).
Benefits:
 processing more than 40 million transactions
per day;
 low commissions (0.5% if the account is
verified);
 buying fiat and digital currencies online;
 replenishment of the e-wallet in various ways:
bank transfer, e-Voucher, online exchange points,
Bitcoin, credit exchange;
 safe custody of funds;
 monthly payments from the account balance;
 improved user account security;
 high-quality customer-oriented service.
Best practices in making a digital wallet app
If you decide to make wallet apps, you need to
know what to consider in order to achieve the
maximum effective result.
Proper usability
This seems like pretty obvious advice, but, oddly
enough, not everyone pays enough attention to
well-designed usability.
First of all, good usability implies that the desktop
and mobile applications should have
similar payment functionality, and the most
important digital wallet features must exist in both
versions. In the end, you have no idea of your
users’ preferences! Who knows what they’ll choose
- a website or an application? You must consider
any sequence of events.
By the way, the applications we’ve described have
convenient online and mobile versions.
Security
Are mobile wallets safe? Can I trust them with my
cash savings?
People often ask these question, and the fear of
hearing a negative answer prevents them from
becoming active users of digital wallets. However,
if you perform several manipulations to protect user
personal (and confidential) information during the
mobile wallet development process, there will be
no reason to doubt the safety of electronic payment
services you provide.
Let's look at several possible ways to protect the
application which deals with money. Of course, we
won't be able to consider everything, especially
since every year there are more and more
innovative methods to increase the security
of mobile wallet apps. But we’ll do our best.
Passwords
In different e-wallet mobile payment systems, the
password may be called differently: control code,
PIN code, etc., but this doesn’t change its essence.
All e-currencies use such a simple, but quite an
effective way to protect access to a client’s account.
In addition, many digital payment services use
several passwords to enhance security, which the
user must enter at different stages of working with
his account.
Tokenization
Tokenization technology allows securing e-wallet
payments using a reliable data encryption system.
A token is a crypto key which contains no financial
information per se. Even if the fraudster receives
the data token, it will be completely useless. And
the original information, meanwhile, is stored in an
encrypted cloud database.
Such well-known wallets as Apple Pay combine
tokenization with the use of biometric features…
let’s discuss these features, by the by.
Biometric technology
This is quite a popular and modern way to
protect mobile digital wallets.
The point is simple: as you know, each person has
unique physical features by which his personality
can be identified. These features are biometric data
that you’re able to record in a special database with
the help of innovative devices: scanners, sensors,
and other readers. The system stores the
information (say, user’s fingerprint) and converts
into a digital code.
When the user puts his finger on the scanner again,
the system compares the new code with the one it
stores. If the codes match, then the identification is
considered successful.
Files of keys
When registering a new iOS or Android digital
wallet, the user receives a file in which the keys to
it are stored. Without the key file, the attacker, even
knowing the password, won't be able to use the
wallet.
In turn, the file is protected by its own password.
Account blocking
Such a method of protecting electronic money is
applied if none of the security measures provided
could ensure the safety of funds. Then, by calling,
SMS or in any other way, the user forcibly blocks
his e-wallet payment account.
Simplicity
We’ve repeated the rule regarding simplicity many
times over a wide variety of applications, but it has
a special meaning when it comes to digital wallet
apps. After all, everything associated with money
disturbs and alarms people, in one way or another,
and therefore the process of making payments
should be as clear as possible - and therefore
simple.
Don’t force the user to perform too many steps to
achieve the desired result. The fewer actions
required, the better (but, of course, within reason).
However, if the situation with the site
(namely, online e-wallet) can be solved easily,
applications are more difficult to handle. The small
screen of smartphones makes us limit information,
while not missing key steps.
You may either place all the data on one screen or
divide the information into several blocks which
will replace each other as the transaction proceeds.
In the first case, there is a risk to overload the
interface with extra details, in the second - to tire
and even anger the user. However, experienced
UI/UX experts will help you to avoid such a pitty
outcome. They'll strike the happy medium.
Monetization
Mobile wallet development is costly. Surely you're
interested in figuring out the most effective ways to
recoup your wallet investments and, of course,
earn. We're going to bringing to light the
monetization issue.
You may already know the basic methods to
monetize applications, but they're not very suited
to digital card wallets. Here we need a special
approach.
So what options do you have?
1. Taking a fee. It’s a simple way, but not
always the best one. There is a lot of free
solutions, and to persuade to choose yours is the
task of the increased level of complexity.
2. Commission. The company providing
digital payment services gets a commission
(usually not more than 3%) when the user
conducts transactions, pays for various services,
replenishes an account, etc.
3. Increasing business profitability. There is
a different situation. Some companies, wanting
to increase customer loyalty and attract new
clients, create e-wallets to give people an
opportunity to use various payment methods. If
you remember, we've already mentioned the
closed type of mobile wallet apps, and this is
the case. The main goal is not to monetize, but
to strengthen the business. Although one thing
 does not prevent the other, of course. Works
both ways, right?
Future of electronic wallets
You could hear a variety of opinions about the
future of e-wallet payment systems. The ardent
supporters of e-currency believe that the time will
come when humanity can freely forget about paper
money at all. However, there are people with
opposing beliefs either.
As a result of public opinion polls, it has been
found out: those who advocate the active
development of the future of electronic currencies
are in second place. So far, the most popular are
still bank cards. After e-currency, the third place is
occupied by Internet banking. As for the number of
paper money supporters, it’s getting smaller every
year.
Based on the number of potential users of virtual
settlement systems, one can outline the future of
electronic payment platforms. Providers of e-
payment services set themselves the task of
satisfying the demands of their average consumer,
which means they're going to focus more and more
on:
 updating the resource so that it constantly
meets the dictates of time and uses the most
innovative technologies;
 security enhancement. A rather obvious point
which will receive increased attention in the
coming years;
 improved usability. Another factor that will be
determinant during mobile wallet development.
 expansion of scope. Now there are still outlets
not accepting e-wallet mobile payments.
However, all types of e-wallets should be no less
commonplace than the same bank cards.
 focus on user experience. Obviously,
electronic payment services providers attach
importance to the experience their user gets.
Therefore, maximum efforts will be made to
 improve this experience and allow the user to
manage his e-wallet app more efficiently.
Having considered different opinions, we can make
a conclusion: e-payment services are developing at
a very rapid pace. Of course, the parallel existence
of two monetary systems is quite acceptable. But
the power balance will be on the side of virtual
money, this fact is too obvious to deny it.
Summary
Now you’ve got a complete picture of the digital
payment services and the future which may await
them. Perhaps it's time to move to more action,
what do you think?
If so, Agilie team would be happy to offer its
services. We know how to develop e-wallet and
have the appropriate experience. Therefore, our
experts are quite ready to face all the difficulties
and pitfalls, for we understand how to circumvent
them. That's why we’ll be able to provide you with
the most effective and successful wallet service
built from scratch.
ADDITTIONAL NOTES FOR BANKING :
Why are savings needed?
Savings is the percentage of income which is not
spent on present expenditures, instead conserved
for future use. Being totally unaware of the future
happenings, one should be ready to face any kind
of unpredictable events. In such tough situations,
our savings will be very helpful and beneficial to
us.
Emergencies
Emergencies may come at anytime and we should
always have a backup to handle such situations.
Some examples of emergencies from our day to
day life are −
 Personal and family health issues.
  Loss due to sudden natural calamities like
flood, earthquake or cyclone, etc.
 Loss due to theft or any other unanticipated
events.
 Sudden financial help for friends or relatives.
 Unplanned trips or any other plans.
Future Needs
Few future needs are listed below −
Retirement
The main purpose to save money is for your
retirement. The earlier you start saving for
retirement, the less you have to save in future.
Saving for retirement makes you self-dependent
and financially secure.
Own a property
Everyone dreams of owning a house. Though it is
not an easy task, saving from early stages can help
in fulfilling this dream.
Own your own vehicle
In today's scenario, transportation has become
difficult in metropolitan cities. To explore places
with ease and comfort, a person needs a car.
Education
Cost of education has become a burden these days,
especially for higher studies. In order to attain
higher degrees, one should save money.
To rescue debts and large expenses
We should start saving to deal with large expenses
like −
 Buying property: house or land

 Buying vehicles

 Buying gold or expensive jewelry

 Handling emergency needs like health-related

issues
 Going on a family tour

 Facing complex situations during natural

calamities
Drawbacks of keeping cash at home
Here, we list certain drawbacks of maintaining
cash at home −
Unsafe
It is unsafe to keep cash at home as there is a
chance of theft or robbery.
Loss of Growth Opportunity
Keeping cash at home causes huge loss to the
country's economy as it does not participate in
national growth.
 Recurring Deposit −It is referred to as a
monthly deposit for particular period of time
for which the interest will be provided by
banks to their customers.
 Fixed Deposit −It is bulk amount deposited by

the customer for a fixed period of time, i.e., an

year or two.
 In any of the schemes provided by banks, there

will be profit.
 We can even earn interest or dividend by
depositing our money in saving bank account.
No Credit Eligibility
  A person should have minimum balance in
savings account to apply for credit cards or
loans.
 If we save money at home instead of banks, we
can't avail the credit facility provided by the
financial institutions during tough times.
Why is bank needed?
Bank is an official financial institution that accepts
money from public and lends money to public.
Secure Money, Earn Interest, Get Loan
Bank functions in various ways. Few of them are
listed below −
Secure Money
 Bank helps to save our money very securely.

 Loading all your cash at home isn't safe.

 You can loose your money in situations like

fire, flood or earthquake

 In order to avoid the scenarios given above, we

need a bank.
Earn interest
Banks provide us with interest if we save money
through RD and FD. In any of the schemes
provided by the bank there will be an opportunity
of growth in our money.
Get Loan
Bank will provide several kinds of loans if we
satisfy the criteria issued by a bank and submit all
necessary documents. Types of loans provided by
bank are −
 Home Loan − Home loan is the money lent by

banks to buy properties at a certain rate of

interest to be paid every month as EMI.
 Personal Loan − Banks provide you with
personal loans for marriage, emergency
periods, etc.
 Jewel Loan − Banks provide you with jewel

loans where you pledge your jewelry to get

loan.
Remittances using Cheque and Demand Draft
Remittance is defined as the transfer of money or
funds from one bank to another, either the same
bank or different. Remittance can be done using
Demand draft by Cheque, Pay slip, Mail Transfer,
etc. A demand draft or "DD" is a popular mode of
money transfer, where most of the banks in India
use this for the effective transfer of money.
Demand draft is usually issued on request of the
client, for bill payments, and for transfer of
property of deceased to legal heirs, etc. DD form
requires the following details to be filled by the
customer −
 Type of instrument needed.

 Receiver's Name.

 Transmitter's Name.

 Total amount to be transferred.

 The bank or location where the transferred

money is to be funded.
 The way money is to be paid, i.e. in "Cash" or

through a "Bank Account" in which you will

 pay money, i.e. in cash or by debit to your
account.
 You should submit form along with cheque or
cash.
Avoid risk of Chit Funds and Sahukars
Using banks to save money, we can avoid the
below stated risks −
Chit Fund
Chit funds are local bodies which help to save
money. It is run by one or more people of that area.
Chit fund is purely based on trust. It is easy to join
the chit fund because no proper background is
needed except some paperwork. If you deposit
money in chit fund you can take out that money
whenever you need. Instead, in banks you must
wait until the time period get completed.
Risk in saving money in chit funds or Sahukars
 Chit funds are not authorized parties to deposit

money.
 People who are running chit funds can wind up

their chit fund if they wish to do so.

  There are chances of loss or theft of money.
 There is no security or assurance for the money
you deposit in chit funds.
 There is a chance that the fund manager
disappears with mass amount.
 A member could disappear after winning the
first bid.
Banking Products
We shall learn various banking products −
Accounts
An agreement with a bank, where an account
holder can deposit and withdraw money or savings
as needed.
Types of Accounts
There are three types of accounts avaliable, namely
−
Personal account
Account that represents an individual or an
organization is termed as "Personal account".
Examples: Mr. Rama's account → Individual
persons account; Samsung's
account → Organization's account.
Real account
The account that represent tangible assets, that is,
which can be physically sensed, is termed as "Real
account". Examples include: cash, goods, stock
accounts, etc.
Nominal account
Account that represents expenses and incomes is
termed as "Nominal account". Examples include:
salary, loss of asset accounts, etc.
Deposit
Accumulation of money in the bank is termed as
deposits. There are two types of deposits: Time
deposit and Demand deposit. Time deposit is
defined as money deposited for a particular period
of time which cannot be withdrawn before the time
gets lapsed.
 Fixed deposit − A bulk amount is deposited for

a fixed period like a year or two years etc.

  Re-investment deposit − Interest is
accumulated quarterly and paid on maturity.
 Recurring deposit −Fixed amount is deposited

at regular intervals like a month or quarterly

etc.
Demand deposit is the scheme where the customer
can withdraw money on demand without earlier
notice to the bank. Demand deposit may or may
not provide interest to the customer. Examples of
demand deposits include current account and a
savings account.
Types of Loan and Overdrafts
Loan is termed as the fund lent to a person on
having a promise that he/she will return the money
within a certain period with interest. Loan falls
under the following categories.
Secure Loan is a loan where the borrower pledges
any of his/her assets like house, land, jewel or any
of the belongings as security. The financial
institution has a right to sell these if repayment is
not done on time.
Unsecure Loan is where the borrower does not
submit any of the belongings as security to the
bank. The example includes peer-peer lending,
personal loans, credit debts, etc.
Demand Loan is a loan where a person borrows
money on demand. It doesn't fix return time.
Educational Loan is money borrowed to support
one's education. He/she doesn't have to repay the
money while studying.
Personal Loan is a loan that is borrowed based on
personal interest for marriage, world tour, other
expenses, etc.
Commercial Loan is lent to an organization for
improvement purposes.
Overdraft
An overdraft is a condition that occurs when a
person attempts to withdraw money from zero
balance account. The types of overdraft include −
 Secured Overdraft −Secure overdraft is where

the customer pledges any of his/her assets to

bank as security.
  Unsecure Overdraft − Unsecure overdraft is
the one where the customer does not submit
any of the belongings as security to the bank.
Filling up of Cheque, Demand Drafts
We will separately learn how to fill cheques and
demand drafts below −
Filling up of Cheque
You must provide the following details while
filling a cheque.
 Write date at the top right corner of your

cheque.
 Write name of the receiver to whom the cheque

is to be encashed.
 Write the amount both in numbers as well as

words.
 Put your signature at bottom left corner of the

cheque.
Filling up of Demand Drafts
You must provide the following details while
filling a demand draft.
 Type of instrument needed.

 Receiver's Name.

 Transmitter's Name.

 Total amount to be transferred.

 The bank or location where the transferred

money is to be funded.
 Mode of transaction, i.e. in "Cash" or through a

"Bank Account" in which you will pay money,

i.e. in cash or by debit to your account.
  You should submit the form along with cheque
or cash.

Documents for Opening Accounts

You need the below documents to open account in
banks −
Know your Customer (KYC)
Know your Customer is a process in which banks
acquire details about the identity and address of the
customers. It is practice accomplished by banks
when you open an account with that bank. Banks
in regular intervals will update their customer
details. The KYC process helps to make sure that
the bank services are not misused.
Photo ID Proof, Address Proof
RBI issues a certain norm to be followed while
opening an account. One of that is KYC during
account opening. We should be providing ID proof
and Address proof during the KYC process.
 ID Proof − KYC process accepts Voter ID

card, Aadhaar Card, Driving license, PAN

card, Passport, etc., as ID proof.
 Address Proof − Ration card, rental
agreement, gas book, telephone bill, voter ID,
Aadhar card, etc., are accepted as address
proof.
Indian Currency
Indian currency is issued by "Reserve Bank of
India". Indian rupee is the official currency of
India. The word "Rupee" is the derivative of the
Sanskrit word "Rupya" (meaning silver coin). It is
denoted by the code "INR". We have 10, 20, 50,
100, 200, 500, 2000-rupee notes and 1, 2, 5, 10-
rupee coins.
Banking Service Delivery Channels - I
We shall learn different banking service delivery
channels in this section −
Bank Branch and ATM
Bank branch is one of the easiest and simplest
ways of providing banking services. Every area has
one or more bank branches depending on the space
coverage of the area through which we can access
bank services. We can go to the branch physically
and avail services like money deposit or
withdrawal, salary update, pension withdrawal, etc.
Automatic Teller Machine has reduced lot of
human workload. This is one of the cheapest
sources of bank delivering 24/7 service. This
facilitates us with the service of money
withdrawal. We also have cash deposit machines,
passbook update machines, etc.
Bank Mitra with Micro ATM
Bank Mitra is also called as "Customer Service
Point". Mitra provides services like account
opening, cash deposit, cash withdrawal, fund
transfer, etc., and is a representative of mini bank
which provides services to rural areas. It especially
provides services to villages where no bank
branches are available.
Point of Sales
Point of Sales (POS) support for real-time
transactions. Suppose if you are purchasing
anything in shops and decided to use your debit
card, the consumer will be having a POS machine
in which your debit/credit card is swiped to deduct
the amount for your purchase. This provides
cashless transaction facility.
Banking Service Delivery Channels - II
This section deals with online delivery channels −
Internet Banking
Internet banking helps to save your time by
providing digital services like −
 Transfer funds from your account to another

account.
 Verify your bank account particulars and
statements.
  Make payment of utility and credit card bills.
 Open and renewal of fixed deposit account.
 Recharge and payments of daily needs like
prepaid mobile/DTH, train bookings or bus
tickets, etc.
National Electronic Fund Transfer (NEFT)
National Electronic Fund Transfer is a nationwide
fund transfer system formulated and maintained by
RBI. It helps to transfer funds between customers
of the bank across the country. It was started in the
year 2005. NEFT follows batch wise fund transfer
process that it works from 8.00 AM to 6.30 PM on
Monday to Saturday excluding 2nd, 4th Saturday
and government holidays.
Real Time Gross Settlement (RTGS)
Real Time Gross Settlement (RTGS) is a real-time
electronic fund transfer system between banks.
Unlike NEFT which follows a batch process,
RTGS helps to transfer funds in real-time and
gross basis. Real-time settlement refers to that
there is no waiting time for the money to get
transferred. Gross refers to one-to-one transaction.
The minimum amount to be transferred through
RTGS is 2,00,000 rupees. Apart from money this
helps to transfer securities (tradable financial
asset).
Immediate Payment Services (IMPS)
Immediate Payment Services (IMPS) was launched
in the year 2010. IMPS is available 24/7 and even
on holidays. IMPS is managed by National
Payments Corporation of India. It offers interbank
electronic fund transfers and it is accepted by
almost all banks and financial institutions.
Insurance
Insurance is an agreement to deliver a
compensation amount by the financial institution
for certain loss, destruction, ailment, or demise in
return for payment of a specified premium.
Necessity of Insurance
Insurance is protection for financial loss and
provides medical support in case of severe
ailments. It provides safety and security to human
life as well as business. It generates financial
resources, encourages savings by investing regular
premium and promotes economic growth by
mobilizing domestic savings. Insurance. Insurance
accelerates economic growth by collecting and
investing funds in industrial development.
Insurance helps to get loans. Insurance helps in
medical emergencies.
Life Insurance and Non-Life Insurance
In the subsequent section, we shall discuss various
about various Life Insurance schemes and various
other schemes −
Life Insurance
An agreement to deliver compensation amount by
the financial institution on demise of an insured
person in return for payment of a specified
premium.
Necessity for Life Insurance
 To give heirs a financial support after a
person's demise.
  To protect your family and loved ones.
 To pay off debts taken by you.
 To support uncertainties in life.
Non-life Insurance
General or non-life insurance saves individual
against uncertainties, loss, destruction and damage
caused by natural events.
Necessity for Non-Life Insurance
 It provides peace of mind to the insured person

or business man.
 It replaces lost income, destroyed property or

damaged objects.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
Pradhan Mantri Jan-Dhan Yojana (PMJDY) is
launched by Prime Minister of India, Narendra
Modi on 28 August 2014.PMJDY is a National
Mission for Financial Inclusion to ensure access to
financial services, namely, Banking/Savings &
Deposit Accounts, Remittance, Credit, Insurance
and Pension in an affordable manner. Account can
be opened in any bank branch or Business
Correspondent outlet. PMJDY accounts are being
opened with zero balance. However, if the
account-holder wishes to get cheque book, he/she
will have to fulfill minimum balance criteria.
Benefits of PMJDY
 Interest on deposit
 Accidental insurance cover of Rs. 1.00 lakh
 No minimum balance required
 Life insurance cover of Rs.30,000/-
 Easy transfer of money across India
 Beneficiaries of Government Schemes will get
a direct benefit transfer in these accounts.
 After satisfactory operation of the account for 6
months, an overdraft facility will be permitted.
 Access to pension, insurance products
 Accident insurance cover, repay debit card
must be used at least once in 45 days.
  Overdraft facility up to Rs.5000/- is available
in only one account per household, preferably
lady of the household.
Social Security Schemes
There are lots of social security schemes launched
by the Prime Minister "Narendra Modi". Some of
the important schemes are described in detail
below.
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
The scheme offers to provide you or your family a
cover of up to Rs. 2 lakhs in case of any accidents,
resulting in death or disability of the insured. In
case of death or full disability, you or your family
will get Rs. 2 lakhs and in case of partial disability,
you will get Rs.1 lakh. Full disability means loss of
both eyes, both legs, both hands, whereas partial
disability means loss of one eye or leg or hand.
Age of the Insured – Savings bank account
holders aged between 18 years and 70 years are
eligible to apply for this scheme. People aged more
than 70 years will not be able to get the benefits of
this scheme.
Premium Amount – It costs you just Rs. 12 in
annual premiums for having an accidental death or
disability cover of Rs. 2 lakhs under this scheme. It
works out to be just Re. 1/month, which is
extraordinarily low. Again, your age has nothing to
do with the premium payable for your insurance
cover under this scheme as the premium is fixed at
Rs. 12 for a cover of Rs. 2 lakhs.
Period of Insurance – You will remain insured for
a period of one year from June 1, 2015 to May 31,
2016. Next year onwards, the risk cover period will
remain to be June 1 to May 31.
Administrators for PMSBY– The scheme would
be offered/administered by many general insurance
companies, both in the public sector as well as in
the private sector. Participating banks will be free
to engage any such general insurance company for
implementing the scheme for their subscribers.
National Insurance Company Limited, Oriental
Insurance Company Limited and ICICI Lombard
are some of the companies which would be
offering this scheme.
Auto Debit Facility – You will be required to
provide your consent for auto debit of Rs. 12 as the
annual premium from any one of your bank
accounts at the time of enrolling for this scheme.
This premium of Rs. 12 will get deducted from
your savings bank account through auto debit
facility every year between May 25 and June 1.
Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJJBY)
Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJJBY) is a "Life insurance" coverage by
"Government of India". The following are the
features of this life insurance scheme −
Age of the Insured – Bank account holders aged
between 18 and 50 years are eligible to apply in
this scheme. So, if you are aged more than 50
years, you are not eligible to enroll yourself in this
scheme. But, once enrolled, you can continue with
this scheme till you attain the age of 55 years.
Premium Amount – Less than Re. 1 a day or an
annual premium of Rs. 330 is what you need to
pay to get a life cover of Rs. 2 lakhs. No matter
what your age is, the premium is fixed at Rs. 330
for a life cover of Rs. 2 lakhs. This annual
premium of Rs. 330 has been fixed for the first
three years from June 1, 2015 to May 31, 2018,
after which it will be reviewed again based on the
insurers' annual claims experience.
Period of Insurance – June 1st, 2015 to May 31st,
2016 is the period for which this scheme will cover
all kinds of risks to your life in the first year of
operation. Next year also, the risk cover period will
be from June 1 to May 31.
Auto Debit Facility – Annual premium of Rs. 330
will get deducted from your savings bank account
through auto debit facility. You will have to give
your consent for auto debit of premium from any
one of your bank accounts at the time of enrolling
for this scheme.
Atal Pension Yojana (APY)
The Government of India is concerned about the
old age income security of the working poor and is
focused on encouraging and enabling them to save
for their retirement. To address the longevity risks
among the workers in the unorganized sector and
to encourage the workers in the unorganized sector
to voluntarily save for their retirement, the
Government of India has announced a new scheme
called Atal Pension Yojana (APY) in 2015-16
budget. The APY focuses on all citizens in the
unorganized sector. The scheme is administered by
the Pension Fund Regulatory and Development
Authority (PFRDA) through NPS architecture.
Eligibility for APY − Atal Pension Yojana (APY)
is open to all bank account holders who are not
members of any statutory social security scheme.
Age of joining and contribution period − The
minimum age of joining APY is 18 years and the
maximum age is 40 years. One needs to contribute
till he/she attains 60 years of age.
Enrollment agencies − All Points of Presence
(Service Providers) and Aggregators under
Swavalamban Scheme would enroll subscribers
through the setup of the National Pension System.
If a person joined Atal Pension Yojna at 35 years,
he will contribute till the age of 60 years i.e. for 25
years. If he wants monthly pension of Rs. 1000 he
would contribute Rs. 181 a month. On his death his
wife will receive Rs. 1000 per month and after her
death the nominees will get 1.7 lakh. If he wants
monthly pension of Rs.3000 he would contribute
Rs. 543 a month. On his death, his wife would get
Rs. 3000 per month and after a death the nominees
will get 5.1 lakh.
Pradhan Mantri Mudra Yojana (PMMY)
Prime Minister Narendra Modi launched Micro
Units Development and Refinance Agency Ltd
(MUDRA) Bank on 8 April, 2015 with a corpus of
Rs. 20,000 crore and a credit guarantee corpus of
Rs. 3,000 crore. The launch was the fulfilment of
an announcement made earlier by the Finance
Minister Mr. Arun Jaitley in his FY 15-16 Budget
speech.
Objectives of PMMY
 Regulate the lender and the borrower of
microfinance and bring stability to the
microfinance system through regulation and
inclusive participation.
 Extend finance and credit support to
Microfinance Institutions (MFI) and agencies
that lend money to small businesses, retailers,
self-help groups and individuals.
 Register all MFIs and introduce a system of
performance rating and accreditation for the
first time. This will help last-mile borrowers of
finance to evaluate and approach the MFI that
meets their requirements better and whose past
record is most satisfactory. This will also
introduce an element of competitiveness
among the MFIs. The ultimate beneficiary will
be the borrower.
 Provide structured guidelines for the borrowers
to follow to avoid failure of business or take
corrective steps in time. MUDRA will help in
laying down guidelines or acceptable
 procedures to be followed by the lenders to
recover money in cases of default.
 Develop standardized covenants that will form
backbone of the last-mile business in future.
 Offer a Credit Guarantee scheme to provide
guarantee to the loans which are being offered
to micro businesses.
 Introduce appropriate technologies to assist in
the process of efficient lending, borrowing and
monitoring of distributed capital.
 Build a suitable framework under the Pradhan
Mantri MUDRA Yojana for developing an
efficient last-mile credit delivery system to
small and micro businesses.
National Pension Scheme
National Pension Scheme is a voluntary defined
contribution pension system. NPS is administered
and regulated by the Pension Fund Regulatory and
Development Authority (PFRDA). NPS is the most
economical pension scheme for Indian citizens
between 18-60 age group. The more the invested
money, the more the accumulated pension. A
citizen of India, whether resident or non-resident
can avail NPS facility. The NPS is applicable to
central government employees, state government
employees, corporate, individual, unorganized
sector workers - Swavalamban Yojana. NPS helps
to protect your future and get tax benefits.
Components of National Pension System
Point of Presence (POP) − The authorized
branches of a POP, called Point of Presence
Service Providers (POP-SPs) act as collection
points and extend a number of customer services to
NPS subscribers.
Central Recordkeeping Agency (CRA) − This
provides recordkeeping, administration and
customer service functions for all subscribers of
the NPS.
Pension Funds (PFs)/Pension Fund Managers
(PFMs) − The six Pension Funds (PFs) appointed
by PFRDA would manage your retirement savings
under the NPS.
Trustee Bank − The Trustee Bank appointed
under NPS shall facilitate fund transfers across
various entities of the NPS system.
Annuity Service Providers (ASPs) − ASPs would
be responsible for delivering a regular monthly
pension after you exit from the NPS.
NPS Trust − A Trust, appointed under the Indian
Trusts Act, 1882 is responsible for taking care of
the funds under NPS in the best interests of
subscribers.
Pension Fund Regulatory and Development
Authority (PFRDA) − An autonomous body set
up by the Government of India to develop and
regulate the pension market in India.
Public Provident Fund (PPF) Scheme
Public Provident Fund (PPF) is a 15-year
investment scheme launched by government of
India to enjoy a tax exempted investment. It was
introduced by the National Savings Institute of the
Ministry of Finance in 1968. A minimum yearly
deposit of Rs. 500 is required to open and maintain
a PPF account. It provides 7.9% interest. Loan
facility is available in PPF account.
Bank on your mobile
Mobile plays a major role in day-to-day activities.
We can access services provided by bank through
mobile.
Mobile Banking
Mobile banking is a facility provided by all banks
to make customers' work easy. Using mobile app,
we can do the following activities.
 Transfer funds from your account to another

account.
 Verify your bank account particulars.

 Make payment of utility and credit card bills.

 Open and renewal of fixed deposit account.

 Recharge prepaid mobile/DTH.

1. Explain in detail digital financial services

and latest FinTech product available in market
with their usage.
2. What is Twin Balance Sheet Problem in the
Indian banking sector, in the light of above
case?
3. Do you adore New Age Clearing? How?
Describe EFT to support your answer
4. Are you in the favour of government
suspending Insolvency process for a year?
Discuss.
5. Brief the process of IBC in detail.
6. What could be the resolution plan for Banks
if NPA increases?