Data Communications Networks and EFT Systems

Data Communications Networks and EFT Systems (Jaiib/DBF Paper 1, Module C, Unit 3)

Dear bankers,

As we all know that  is Data Communications Networks and EFT Systems for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are providing the Data Communications Networks and EFT Systems (Unit-3), BANKING TECHNOLOGY (Module C), Principle & Practice of Banking JAIIB Paper-1.

♦Data Communication Networks

  • Data communications helps in drastically cutting and the time involved in transferring data from the point of origin to the computer and information from the computer to the point of use.

Components of Data Communications Networks

  • Data communications typically consists of various data communication components. When the components operate together for the sharing of resources, they are said to form a network. It has three basic components.

Transmission Devices and Interface Equipment

  • The data is transmitted along the communication path between computer devices using electrical signals and bit sequences to represent number and characters.
  • Modem: A modem is a device or program that enables a computer to transmit data over, for example, telephone or cable lines. Computer information is stored digitally, whereas information transmitted over telephone lines is transmitted in the form of analog waves. A modem converts between these two forms.

Transmission Medium

  • For Communications between computers, the data has travel through some medium during its transmission. The prevalent technologies for data communications media are terrestrial, microwave and satellites.

(a)Terrestrial Cables (Three types)

  • Twisted Pair
  • Coaxial Cable
  • Optical fibre

(b)Microwave systems: A microwave system is a system of gear used for microwave data transmission. The typical microwave system includes radios located high atop microwave towers, which are used for the transmission of microwave communications using line of sight microwave radio technology.

(c) Communication satellite: A satellite is a body that moves around another body in a mathematically predictable path called an Orbit. A communication satellite is nothing but a microwave repeater station in space that is helpful in telecommunications, radio, and television along with internet applications.

A repeater is a circuit which increases the strength of the signal it receives and retransmits it. But here this repeater works as a transponder, which changes the frequency band of the transmitted signal, from the received one.

The frequency with which the signal is sent into the space is called Uplink frequency, while the frequency with which it is sent by the transponder is Downlink frequency.

Transmission Processors

The Purpose of communication processors is to enhance is to data communication between two points. Communications processors can be broadly categorized as:

  • Message Switches
  • Multiplexers
  • Front end processors

Modes of transmission

  • Simplex
  • Half- Duplex
  • Full Duplex

♦Network Scenario in India: Major Networks

  • The Committees on communication networks for banks, set up in 1987 under the chairmanship of “T.N Anantharam Lyer executive director, RBI, had strongly recommended for the establishment of a cooperative communication network especially for the banking industry.

INET

INET was set up by the department of telephones in the year 1991. It is a fast, reliable, flexible and quite cost effective data communication network.

NICNET

NICNET has been set up by the National Informatics Centre (NIC), a Government of India organization. It is India’s largest Wide Area Network (WAN). The Master Earth station is installed in New Delhi, to provide access to satellites and operates from around 2000 VSAT terminals.

INDONET

It was set up by CMC Ltd. In the 1980 and was among the first countrywide networks in India.

RBINet

After recognising the pressing need to harness information technology for intra-bank and inter-bank communications in the 1980s, RBI commissioned the BANKNET in 1991.

RBI Net is also being used by several departments of banks for various applications such as:

  • Transmission of section 42(2) o the RBI Act, 1934, data by commercial banks to regional offices of department of banking operations and development (DBOD) and furnishing of consolidated data by the regional offices of DBOD to central DBOD.
  • Press relations division daily news summary of important financial matters.
  • Department of economic analysis and policy macroeconomic indicators on a weekly basis.

♦Emerging Trends in Communications Networks for Banking

RBI’s VSAT Network

  • The Indian Financial Network (INFINET) is a Closed User Group (CUG) Network for the exclusive use of Member Banks and Financial Institutions. It was set up by the Reserve Bank in 1999 through the Institute for Development and Research in Banking and Technology (IDRBT) Hyderabad. The Institute explored capability, methods, procedure to expand the network using a blend of communication technologies such as VSATs and Terrestrial Leased Lines.  In order to have a careful combination of technologies in the INFINET, a Leased Line Network (LLN), connecting 21 major cities has been seamlessly integrated with it. The LLN is a mix of 2 Mbps and 64 Kbps lines. The LLN provides gateways to banks from each of these 21 cities. The Network Management System (NMS) of the LLN is located at the INFINET Hub at Hyderabad. The Backup NMS is located in the Main Office of RBI in Mumbai
  • Among various inter-bank and intra-bank applications ranging from simple messaging, MIS, EFT (Retail), Electronic Clearing Service (ECS) for both Credits and Debits, online dealing and trading in Government securities, Centralized Funds Management System(CFMS) for Banks and Financial Institutions, Anywhere banking/Anytime Banking (ATM), Inter-Branch Reconciliation, Structured Financial Messaging System (SFMS) and Electronic Funds transfer (RTGS/NEFT) System, transmission of Inter-city Cheque Realisation advices, government securities trading, and currency chest accounting  are  done through this service. VSAT technology service can also be used for one-way and/or interactive communications via satellite. Presently, the network consists of over 950 VSATs located in 127 cities of the country. All Banks and financial institutions in the country are eligible to become members of the INFINET.

Internet

  • The Internet is a global network of networks. It is a system of computers which allows user computers exchange data, message, files etc.
  • Serial Line Protocol (SLIP)
  • Point to Point Protocol (PPP)

Internet Access Service

  • E-mail
  • Usenet
  • Gopher
  • File Transfer Protocol (FTP)
  • World Wide Web (WWW)

♦SWIFT (Society for Worldwide Interbank Financial Telecommunication)

  • SWIFT message types are the format or schema used to send messages to financial institutions on the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. The original message types were developed by SWIFT and retrospectively made into an ISO standard, ISO 15022. In many instances, SWIFT message types between custodians follow the ISO standard. This was later supplemented by a XML based version under ISO 20022.
  • SWIFT India Domestic Services Pvt Ltd (“SWIFT India” or “the Company”), founded on similar principles, is a financial messaging services provider formed by SWIFT SCRL and Indian banks, for the domestic Indian financial community and by the community.
  • Through shared resources and capital, SWIFT India functions with the objective of enabling harmonised exchange of structured financial information between domestic participants in the domestic Indian community, thereby

(a) Reducing costs and risks,

(b) Expanding the reach of automated, standardised and secure exchange of information across the industry,

(c) Enabling new instruments, opportunities and markets for the industry.

Message types:

    • Real-time and bulk messages
    • File transfer of structured and unstructured information

Security:

    • Role-based access control
    • Maker-checker controls
    • 3 layers of asymmetric encryption to ensure integrity, authenticity and confidentiality
    • Hardware security modules
    • Support for local Controller of Certifiying Authorities (CCA)  licensed public key infrastructure (PKI)

International and domestic standards:

    • Support for international ISO 15022 (MT) and ISO 20022 (MX) message formats, including domestic to international message transformation
    • Support for local market practices and flows
    • Support for local addressing schemes such as the Indian Financial System Codes (IFSC)

Value added message features:

    • Guaranteed delivery
    • Delivery confirmation and non-delivery warning
    • Broadcast messages
    • Syntax and rule-book message validation
    • Non-repudiation proof of messsage transmission in case of dispute
    • Message retrieval for 124 days in case of messages lost or corrupted by either sender or receiver
    • Store-and-forward for when counterparties are not online

Back-office integration for straight-through-processing

    • Message transformation
    • Multiple protocols (incluing SOAP, MQ, file transfer, etc)
    • Custom workflows

Premium support

    • Standard 24/7 online and phone support
    • Native support by back-office certified partners and services providers across Core Banking System, Treasury System, Cash Management Systems, Retail and Corporate Banking Systems. Payments Middleware and Enterprise Resource Planning Systems.
    • Other premium support  features such as onsite support, pro-active network monitoring and health checks, coordinated business continuity exercises, and others. Visit Support & Training for more information.

♦NEFT, RTGS and IMPS

  • Almost everyone is aware of the difference between RTGS, NEFT & IMPS at user level, but not many know how these differ at the bank level. Once you understand the latter, you’ll be able to better appreciate the existence of the three different money transfer systems.
Comparison Category NEFT (National Electronic Funds Transfer) RTGS (Real Time Gross Settlement) IMPS (Immediate Payment Service)
Settlement Type Half hourly batches Real time Real time
Minimum Transfer Limit Re.1 Rs.2 lakh Re.1
Maximum Transfer Limit No Limit 

However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances within India and to Nepal under the Indo-Nepal Remittance Facility Scheme.

No limit Rs.2 lakh
Service Timings  8:00 AM – 7:00 PM all working days except 2nd and 4th Saturday of the monthUnavailable on Sunday and Bank Holidays

Operates in 23 half-hourly settlement batches

 8:00 AM – 6:00 PM all working daysUnavailable on Sunday and Bank Holidays

.

 Available 365 days 24/7
Types of settlement Batches One-on-one settlement One-on-one settlement
Speed of settlement 2 hours (subject to cut-off timings and batches) Immediately Immediately
Transaction Charges No charges for inward transactions (at destination bank branches for credit to beneficiary accounts) No charges for inward transactionsCharges applicable for outward transactions for amount:

Rs.2 lakh – Rs.5 lakh: not exceeding Rs.25

Above Rs.5 lakh: not exceeding Rs.50

GST is also applicable

Charges for remittance through IMPS are decided by the individual member banks and PPIs. The taxes are included.
Payment Options Online and Offline Online and Offline Online

Telegram Group:- Click Here

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