Developments in the Payment System Architecture of India

The payment and settlement systems are at the core of financial infrastructure in a country. A well-functioning payment and settlement system is crucial for the successful implementation of monetary policy and maintaining the financial stability. This paper examines the various types of Payment systems in India along with the developments aimed at improving the efficiency of Payments system. We analyse both the large value payment systems and retail payment systems. The large value payment infrastructure comprises RTGS, high value clearing, and CCIL. The retail payment systems include MICR/non-MICR cheque clearing, national electronic funds transfer (NEFT) system, electronic clearing service (ECS), cheque truncation system (CTS) and payment channels like credit/debit cards, internet and mobile phone-based products. The paper also looks at the role of RBI in Payment and Settlement System. In addition, there is a description of various recent measures to promote electronic retail payments such as the Digital Wallet, Aadhaar-enabled Payment System (AEPS) and Unified Payment Interface (UPI) of India.