The payment system is one of the most important elements of a financial system and Government always looks for innovative ways of making hassle-free payments to individuals. Since electronic means of payment are both safer and more efficient, efforts are being made continuously to effect a change in the mode of payment from paper to electronic. For the benefit of pensioners in the state of Manipur, the State Government in consultation with RBI, Guwahati contemplated introducing the Regional Electronic Clearing Service (R-ECS) in the existing Pension Payment System from August 1, 2013.
BACKGROUND The Reserve Bank of India (RBI) is doing its best to encourage electronic payment which will bring security and efficiency to payment systems thus rendering the whole process easier for banks. RBI has also encouraged all banks and individuals to embrace e-payment. There are around 43,700 pensioners in Manipur whose saving accounts have been opened and are being operated in 10 banks with 48 branches. Payment of monthly pension to pensioners has been automated in Manipur from April 2007, and all the treasuries are crediting pension to the pensioners’ account on monthly basis by generating a monthly advice list in soft copy (EXCEL format) and hard copy for the bank concerned. However, there has always been some delay in the disbursement of pension in the pensioners’ bank account as there is an inordinate delay at the destination banks in crediting the money into the pensioner’s savings account. It was against this background that the State Government of Manipur, in consultation with RBI, Guwahati contemplated introducing the Regional Electronic Clearing Service (R-ECS) in the existing Pension Payment System of Manipur with effect from August 1, 2013.
OVERVIEW OF REGIONAL ELECTRONIC CLEARING SERVICE (R-ECS) R-ECS is a region-wise mode of electronic funds transfer introduced by RBI. R-ECS facilitates bulk transfer of money from one bank account to many bank accounts or vice versa using the services of a Regional Clearing House. There are two types of R-ECS i.e R-ECS (credit) and R-ECS (debit). The turnaround time for data submission by the user is two days prior to settlement date. Returns are provided on the next working day of the settlement date. R-ECS facilitates the coverage of all core-banking-enabled branches in a state or group of states and can be used by organizations within the state or group of states. The system takes advantage of the core banking system in banks. Accordingly, even though inter-bank settlements takes place centrally at one location in the state, the actual customers under R-ECS may have their accounts at various bank branches across the length and breadth of the state or group of states.
Sample R-ECS file
R-ECS PAYMENT SYSTEM The R-ECS Payment System is a client-server-based software developed by NIC Manipur as an add-on to the Pension Payment System already implemented at all the pension processing treasuries of Manipur. Certain key information pertaining to Treasury Officer such as user number, user name, sponsor-bank branch sort code, etc. are collected from RBI using E-1 mandate and captured in the R-ECS Payment System. The Electronic Pension Advice generated by Pension Payment System is ported to the R-ECS Payment System to generate a 156 column sequential file in RBI format containing header/credit contra and credit records. The credit contra is the first record in the file and contains the details of the user such as user number, user name, sponsor-bank sort code, the upper limit of the individual credit entry, the total value of all the credit items, etc., which acts as control information while processing the credit records. Certain key information in the credit contra record are repeated in all the credit records to make each credit record self contained with both credit and debit particulars of the transaction. Sample R-ECS file generated by R-ECS Payment System is as follows:- This sequential file along with mandate E-2 is sent by the Treasury Officer to the sponsor bank (SBI Imphal) by email. The sponsor bank uploads this validated file through the secured web server of RBI. The National Clearing Center (NCC) of RBI, Guwahati retains the mandate (E-2), processes the data, arrives at the settlement, generates destination bank wise data/reports and makes available the data/reports through secured web-server to the destination banks. The destination banks carries out posting to the individual accounts maintained on their different CBS-enabled branches on the same settlement date through CBS. The destination banks generate a file E-3 for returning the uncredited items to the NCC, RBI, Guwahati, which in turn generates a combined list of uncredited items for each branch (R-7). Item-wise Destination Ledger Report (R-5), Initial Sponsor Bank Settlement Report (R-6) and R-7 are forwarded by NCC, RBI, Guwahati to the sponsor bank for further submission to the Treasury Officer concerned as well as for reconciliation with the AG office.
Basic workflow of R-ECS Payment System
IMPACT OF R-ECS • No more enquiry at treasury and banks regarding credit of monthly pensions • Cost-effective – Enormous savings in Treasury Office for printing, dispatch and reconciliation of paper documents • Efficient payment mode ensuring that the pensioners get credit on the settlement date irrespective of the location of the bank in which the account is available • Pensioner need not make frequent visits to the bank • Banks running R-ECS practically converts to paperless handling • Eliminates the need for customers to go to the collection centres/banks and stand in long queues for payment
CONCLUSION With the adoption of the R-ECS Payment System, the monthly pensions are credited to the pensioners’ saving account on the first working day in 29 CBS (Core Banking Solution) enabled bank branches (Participating Branches) in Manipur and other North-eastern states.