Corporate Access to SWIFT

The issue of ‘Corporate Access to SWIFT’ was put on vote at the 2007 Annual General Meeting of SWIFT. Before that the issue was discussed in different committees of the board and was included in numerous papers to share it with wider community.

Anyone associated with the BFSI industry are aware that SWIFT does not sell directly to corporates rather it offers connectivity and creates awareness. The applications and services are offered by banks and third parties and it is important that this distinction be understood.

As far as corporate customers are concerned direct connectivity to SWIFT means cost effectiveness. Once connected, the Corporate Customers are able to choose one of the following existing and Board /AGM approved governance models in consultation with their Bank counterparts:

1. SWIFT Standardized CORporate Environment (SCORE)
2. Member -Administered Closed User Group (MA-CUG) or
3. Treasury Counterpart

Once this system is operational each corporate will be registered with a SWIFT id called Business Entity Identifier (BEI) and they will have to look to their Banks and vendors to provide the required business functionality. With the use of Swift Message Standards, corporates are allowed to exchange messages only with Banks. Currently corporates are permitted only to use payment related messages. Post the proposed changes it will be a matter of choice for the corporate to design their relay system independent of the connectivity option.

Contributed By:
Mr. KRS Mani
SWIFT Consultant

ATM Shops

One of the payment gateways which has revolutionized the Banking scene is the introduction of ATM Machines - called Automatic Teller Machines or Any Time Money.

The western concept of automatic money dispensing machines without human intervention was slow to catch up as people in India were not computer savvy and a less literate populace was suspicious to use gadgets and machines for an important function like withdrawing cash from their accounts.

With the opening up of the economy Indian Banks faced tough competition from foreign banks. One of the popular services provided by the foreign banks was the ATM service. Once this competition heated up, Indian Banks started installing ATMs all over and there was almost a race to set up the ATMs by the public sector banks and ATMs were installed both ‘on site’ and on ‘off site’ locations. In Railway stations and public places ATMs of various banks started cropping up and banks like UTI bank (now called AXIS bank) installed two ATMs in one railway station. The penetration of ATMs in the urban areas was fast and slowly all the district places were covered. Every bank’s ‘Department of Information Technology’ had huge targets to complete and huge money was invested on hardware. ATM cards were given to all account holders free of cost and thus machines replaced the ‘Human Teller’. People started getting better quality currency notes from ATM as they would not function otherwise.

Currently ATMs are managed and serviced by the respective bank’s branch to which it is attached. With the Introduction of Core banking solution in all the banks the ATMs got connected by a SWITCH and one could access their account from any bank's ATM and get their payment. For this a fee was prescribed and all banks participated in the same because their customers benefited with access to a large network of ATMs.

RBI reviewed the policy of charging customers while using other bank’s ATMs and they abolished the fee and made it free from 01-04-2009. After few months banks complained that their cost of operations were not getting covered due to increase in small withdrawals.

To solve this RBI came with modified instructions of ATM usage. Now customers would be allowed five withdrawals each month from other bank’s ATMs free of charge and from the 6th withdrawal onwards they would be charged for withdrawing from other banks ATMs and the upper limit of withdrawal was fixed at Rs. 10,000 per transaction.

This became effective from 15th October, 2009 and is applicable only to Savings Account Holders. The move was to help customers get access to the payment gateway which is nearest to him without burdening him with high cost of service charges. The charges incurred for the first 5 withdrawals from other bank's ATMs if any, are borne by the bank.

Recently RBI has come out with a new outlet for payments and that is both novel and innovative. They have authorized all the merchant establishments and card acceptors to make payments of cash up to one thousand for a small fee. This is a bold step as so far nobody was allowed to dispense cash on swiping the card except banks and their ATMs.

This new facility is a boon as you can get cash from anywhere where a card is accepted and use the card for drawing emergency cash or regular withdrawals from your nearest outlet.

Now you can visualize many shops opening up, having a swiping machine, with the sole purpose of dispensing cash. It will be like the telecom boom when STD and Phone booths opened all over India and you could see a phone booth round the corner with phones and a printer printing out the charges incurred. The indirect ATM outlets could connect the whole of India faster and bring the technology to the doorstep of the common man and the banks closer to their customers.

Contributed By:
Mr. KRS Mani
Swift Consultant