Test: E-Banking -1 - Banking Exams MCQ

Payment and Settlement Systems constitute a major aspect of a country’s financial and economic structure. A payment system is a system that enables payment between two entities i.e. a payer and payee and constitutes clearing, settlement, or payment service.

MMID is used as an identifier of mobile money.

Objectives of Payment and Settlement Act:

1. Provides for the regulation and supervision of payment systems in India
2. To designate the RBI as authority for purposes related to payment systems in India
3. The Act also provides the legal basis for netting and settlement facilities.

• UPI was launched by NPCI. It makes use of the Immediate Payment Service (IMPS) platform to transfer money between two bank accounts.
• In this, the user generates an MMID, or Mobile Money Identifier, which is a seven digit random number issued by the bank upon registration.
• The payee will need to identify the recipient on the basis of the MMID and the virtual address.

Payment systems transactions in India would comprise transactions processed and settled through (a) Paper Clearing [Magnetic Ink Character Recognition (MICR), Non-MICR, Cheque Truncation System (CTS), Express Cheque Clearing System (ECCS)]; (b)Bulk electronic transaction processing systems like Electronic Clearing Service (ECS), with its variants Regional ECS and National ECS; National Automated Clearing House (NACH) - Debit and Credit; (c) Card Payments(Debit, Credit, and Electronic); (d) Large Value [Real Time Gross Settlement Payment and Settlement Systems in India (RTGS)]; (e) Retail [National Electronic Funds Transfer (NEFT)]; (f) Fast Payments [Immediate Payment Service (IMPS), Unified Payments Interface(UPI)]; and (g) e-Money [Prepaid Payment Instrument (PPI) Cards and Wallets).

BHIM:

• It was launched on 30th December 2016 by PM Narendra Modi.
• It has been designed by the National Payments Corporation of India (NPCI) and named after Dr. BR Ambedkar.
• Using this app, transactions can be made through the Unified Payment Interface (UPI).
• Transactions can be made through a bank account, QR code, mobile number or by creating a unique digital identity.
• NPCI does not charge any fee for using this platform.

There is no minimum limit on National Electronic Funds Transfer (NEFT) transfers.

• It is a “Not for Profit” umbrella organization for operating retail payments and settlement systems in India, is an initiative of RBI and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
• It aims in bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
• The ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank N. A. and HSBC.
• RuPay, an indigenous payment card of India launched by NPCI for all banks of India.
• Developed by National Payments Corporation of India, Unified Payments Interface is an instant real-time payment system, facilitating inter-bank transactions.

The Reserve Bank of India has increased the maximum amount of money that can be transferred under the Indo-Nepal Remittance Facility Scheme from Rs 50,000 to Rs 2 lakhs per transaction. Previously, there was a 12-transaction limit per year.

• Currently, BHIM is available in 20 languages, i.e., Hindi, English, Tamil, Telugu, Malayalam, Bengali, Odia, Kannada, Gujarati, Marathi, Assamese, Bengali, Bhojpuri, Haryanvi, Marwari, Konkani, Manipuri, Khasi and Mizo.
• Bharat Interface for Money (BHIM) is a mobile payments application based on NPCI’s Unified Payments Interface (UPI) which helps in making simple, easy and quick payment transactions
• One can make instant bank-to-bank payments and Pay and collect money using just Mobile number or Virtual Payment Address (UPI ID).
• BHIM was launched on 30th December 2016 by PM Narendra Modi.
• Through BHIM App, one can't pay more than Rs. 20,000 in a transaction. So if one wants to pay more than Rs. 20,000, one has to pay twice.
• The daily limit for BHIM app transaction is ₹40,000.
• There is also a limit to the number of transactions through the BHIM app. The UPI prohibits more than 10 transactions by an account in 24 hours.