Reserve Bank of India Building RTGS System

Reserve Bank of India has launched a project to construct a real-time gross settlement system (RTGS), which will allow secure inter-bank payments throughout the country. The system is planned to eventually interface to all RBI sites, as well as other member banks across the country.

"This project will provide significant benefits to individuals and businesses throughout India," said Hamish Harding, managing director at Logica, the management and IT consultancy that won the roughly $16 million contract to build the system. "By underwriting all payments with collateral held at the Reserve Bank of India, the RTGS system will reduce systemic risk in the Indian banking system, thereby providing increased integrity and security for all interbank transactions."

The RTGS provides for real-time processing and settlement of funds transfers. The first phase of the project calls for creation of an Integrated Accounting System (IAS) to handle all internal and interbank accounting transactions for RBI. This new core banking system will handle all general transactions and central accounting for RBI, including the bank's general ledger, according to Sanjay Joglekar, head of business development at eFunds India, which is providing technical expertise and functional support for the project. A timetable for the project has not yet been set, Joglekar said.

The RTGS will employ two sets of queues: one for testing funds availability and one for processing of debit/credit requests received from the Integrated Accounting System.

All transactions will be queued and submitted for funds availability testing on a first in-first out basis, i.e., all transactions will be queued in the order in which they were received and the oldest transaction in each participant's queue will be tested first. Transactions which fail a funds availability test will be returned to the payment queue to be retested periodically. An optimizing algorithm will scan the queues periodically during the day to identify potential gridlock situations.

Payment messages from a sending bank to the Reserve Bank will be processed through an intermediate processor-the Inter-Bank Funds Transfer Processor (IFTP). Logica's Quaestor banking suite will be supplied to member financial institutions to enable their direct participation in the RTGS system.

"The system will be highly scalable," Joglekar said. "It is designed to handle high volumes including a very high peak."

eFunds, a specialist in technology solutions for payment and risk management, e-commerce and business process improvement, was awarded a multimillion dollar subcontract from Logica to perform work relating to the porting of Logica's RTGS software onto a mainframe platform, as well as to assist Logica in developing the real-time accounting and settlement system for RBI. eFunds has two software development centers in Chennai-where Logica's mainframe development work for the RTGS project will be performed-and two call centers in Mumbai. The company employs more than 2,000 professionals in India.

The RTGS system will be developed on the IBM mainframe S/390, and the operating system will be OS/390, according to Joglekar. The security infrastructure will be PKI-based. The project will employ point-to-point remote copy for back-up and restore operations, meaning that the backup server will be a few miles from the main site, connected over fiber optic infrastructure.