Adoption of ISO 20022 Standards
for RTGS in India
Reserve Bank of India
Scope of Presentation
• Adoption of ISO 20022 in India
•
•
•
•
Strategy
Approach
Implementation
Future Possibilities
Adoption of ISO 20022 in India :
Strategy
Dr A S Ramasastri
CGM in Charge, DIT, RBI
ISO 20022 Adoption Strategy :
Preliminary Work
• Existing RTGS is India uses proprietary message formats.
• Working Group on Approach Paper for NG-RTGS
recommended adoption of ISO 20022 message standards.
• RBI set up a Working Group on Adoption of ISO 20022
message standards with members from Banks, IDRBT, CCIL,
NPCI, IBA and RBI
• Members of the Working Group recommended that there
is a need for adoption of ISO 20022 message standard in
India
• The Working Group also found that it was feasible to
implement the standards for the enhanced RTGS planned
by RBI
ISO 20022 Adoption Strategy :
Eco system preparedness
• RBI took a decision to implement ISO 20022 message formats
along with several other enhancements to RTGS as not doing
now would postpone implementation by a few years
• ISO 20022 compliant Message formats were sent for
certification by the ISO 20022 Standards group
• Montran was advised to make RTGS product ISO 20022 ready
• IDRBT, the provider of Structured Financial Messaging Formats
(SFMS), was entrusted with the responsibility of
• Designing the mapping document between existing proprietary
message formats and ISO 20022 compliant message format
• Preparation of XSDs
• Developing a convertor for temporary use of banks until they migrate
their systems to ISO 20022 compliant
Adoption of ISO 20022 in India :
Approach
Dr A K Hirve
CGM, DIT, RBI
ISO 20022 Adoption Approach
• RBI formed the Working Group for Adoption of ISO
20022 Messaging Standards with following Terms of
Reference
• Designing ISO 20022 compliant message formats for Next
Generation Real Time Gross Settlement (NG-RTGS) and
National Electronic Fund Transfer (NEFT) Payment Systems
• to suggest adoption of uniform referencing system for
payment transactions and
• explore possibility of adopting uniform International Bank
Account Number (IBAN) by banks in India.
• Membership
• SBI, HDFC Bank, HSBC Bank, ICICI Bank and ING Vysya
Bank, CCIL, NPCI, IDRBT, DPSS, DGBA and DIT
ISO 20022 Adoption Approach…
•
Main issues and concerns
•
•
•
•
To address these concerns benchmark testing of ISO compliant messages was
carried out with the involvement of member banks and SWIFT
•
•
•
ISO based messages are four to six times longer,
require twice the bandwidth and
about twice the disk space for storage.
During benchmarking, it was observed that these messages are, in fact, processed more
efficiently, and
have versatile content structure for better MIS and regulatory reporting.
Benefits of Adoption of ISO 20022 standards
•
•
•
provide opportunities in other business areas such as Corporate Treasury Management, Trade
Finance
marginal cost for implementation, technical feasibility and other advantages, working group
suggested proactive adoption of ISO standards
Member banks suggested to implement it early as it will help in back to back automation upto
the customer end.
ISO 20022 Adoption Approach…
• The WG designed identical message formats for RTGS and
NEFT for customer payments
• Kept provision to introduce IBAN in future
• provision of additional fields for ordering and beneficiary
customer to take care of future government MIS requirements
• provision for NRE or such remittances as per RBI requirements
• mandatory field for ‘Purpose code’ to improve MIS, better
communication to the customer and regulatory reporting
• provision for multi currency payment and settlement.
• Other message formats include messages for interbank
payments, debit /credit notification, and net clearing
requests. As regards ‘own account transfers’, ISO message
format already available in the ISO20022 library of
messages was adopted.
Adoption of ISO 20022 in India:
Implementation
Dr Anil Kumar Sharma
General Manager, DIT
ISO 20022 Implementation : Need
• ISO 20022 is required to improve and
automate Corporate-to-Bank Communication,
Bank-to-corporate bank account cash
reporting
• More processes needs to be automated so
new message types needs to be created. It is
only natural to create new message types in
XML format - hence the new ISO 20022
format.
ISO 20022 Implementation : Benefit
• From a system point of view, XML messages are
actually easier to work with than any other
format.
• For most contemporary systems XML is the
default format when exporting data. Hence for
new system implementations it is only natural to
use this format. So we do have a business case.
• XML costs less to implement when we implement
new systems.
ISO 20022 Implementation : Pros
• ISO 20022 standards are XML based – Easy to
maintain and uses Java Technology
• MX messages typically carry more rich and
explicit information than their MT
counterparts, may help in Anti-Money
Laundering
• May reduce costs to banks and increase in
their competitive advantage in long-run
ISO 20022 Implementation : Cons
• Increase in Memory and CPU utilisation
between MX and MT is nominal and
negligible. Again this is highly dependent on
the type of implementation, platform,
language, COTS product (XML parser), etc.
• Although there is increase in disk space and
network bandwidth requirement, so far this
has not been a blocking factor for market
infrastructures for countries who have
decided to migrate their application to ISO
20022.
Big Bang Migration : Pros & Cons
• Pros: Uniform and timely migration, lower
complexity, lower cost, uniform functionality
• Cons: Potential operational & Systemic risks
• Requirements:
– Thorough Industry testing
– Cut off deadline well defined to stakeholders
– Old system remains for fall-back and is also well
tested
Phased Migrations : Pros & Cons
• There are two options:
– Option 1: Dual RTGS Systems to one CBS
• Pros: Migration in line with institutional investment
cycles
• Cons: More complex and more expensive for central
banks, more risks, inertia and potential for delay
• Requirements:
– Design and development of dual RTGS systems
– Agreed timelines of migration and follow-up and incentives
Phased Migrations : Pros & Cons
• There are two options:
– Option 2: Single RTGS System with “transition
services” (at RTGS application or messaging layers)
• Pros: Migration in line with institutional investment
cycles
• Cons: Less complex and less expensive for central banks
as compared with option 1, inertia and potential for
delay
• Requirements:
– Capable providers and robust transition services, e.g. legacy
standards translation
– Agreed timelines of migration and follow-up and incentives
ISO 20022 Implementation :
Process
• Decided to adopt Migration in Phased manner with transition
services at the messaging layer
• Banks given three months time for infrastructure readiness
• Three modes of access with two modes requiring ISO
compliance from day 1 and third mode provided converter.
• Messaging Hub was made compatible with ISO 20022
standards
• RTGS OEM product made its product ISO 20022 compliant
• Pilot Testing with Banks carried out over a period of five
months to familiarise them with ISO 20022 compliant
message formats
ISO 20022 Message Formats
Implemented
Message Identifier
Message Name
Use of message
Used version
pacs.002.001
Additional Information
FIToFIPaymentStatusReport
Yes
V04
Multi-net settlement batch (MNSB)
response and Own account transfer
pacs.004.001
PaymentReturn
Yes
V03
Undo previously settled payment
pacs.008.001
FIToFICustomerCreditTransfer
Yes
V03
Customer credit transfer
pacs.009.001
FinancialInstitutionCreditTransfer
Yes
V03
Interbank transfer, MNSB request and
Own account transfer
BankToCustomerStatement
Yes
V03
End-of-day NG-RTGS statements
BankToCustomerDebitCreditNotification
Yes
V03
Customer Credit / Debit Notification
camt.053.001
camt.054.001
ISO 20022 Message Formats
Implemented
Message Identifier
Message Name
Use of message
Used version
Additional Information
Admi.004
SystemEvent Notification
Yes
V01
Ack/Nack messages exchanged
between ISO 20022 compliant systems
upon delivery of messages
Camt.998
Broadcast Message
Yes
V02
Head.001
Business Application Header
Yes
V01
Pacs.009
IDL Request
Yes
V03
Not an ISO 20022 messages. It is SWIFT
proprietary MX message which is free
to use under certain terms and
conditions
Each financial message i.e. Pacs.008,
Pacs.009, Pacs.004, Pacs.002,
Camt.054 will have Header which
contains sender and receiver
information alongwith Digital Signature
of sender of the financial message.
Fund request from RTGS to Central
Bank Security Settlement System (SSS)
Pacs.009
IDL Response
Yes
V03
IDL response from Security Settlement
System (SSS) to RTGS
Pacs.004
IDL Reversal
Yes
V03
IDL reversal from RTGS to SSS
ISO 20022 Implementation Approach –
Documents Released on RBI Website
• Documents Released on RBI website through
Press Release dated March 7, 2013
• http://www.rbi.org.in/scripts/BS_PressRelease
Display.aspx?prid=28270
Adoption of ISO 20022 in India:
Future Possibilities
Dr A S Ramasastri
CGM in Charge
DIT, RBI
Future of ISO 20022 in India :
Possible Areas of Implementation
NEFT
ACH
CBS of RBI
CBS of all Banks
Thank You