(a) Recommendations of the Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking Industry (1994)

• Establishment of an Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. The message transfers would be in a batch mode with high value institutional funds transfers being batched every one hour and the transactions of retail customers being batched at the end of the day. Starting with the 4 metropolitan cities, the scheme to be extended in a phased manner to all important centres.
• Enactment of suitable legislation on the lines of the Electronic Funds Transfer Act 1978, USA and Data Protection Act 1984, UK.
• MICR clearing be introduced at all centres with more than 100 bank branches. Priority should be given to centres such as Ahmedabad, Bangalore, Hyderabad, Pune and Surat which have relatively large volumes.

• Introduction of a Delivery versus Payment (DVP) system for Subsidiary General Ledger (SGL) transactions, with settlement on gross basis both for securities transactions in Public Debt Off‌ice (PDO) and funds transactions in current accounts at Deposit Accounts Department (DAD).

• Introduction of Electronic Clearing Service Credit for low value repetitive transactions such as interest, dividend, salary, pension payments and an Electronic Debit Clearing for payments to utility companies.

• A uniform size for MICR instruments.

• Geographical expansion of tire BANKNET network with nodes in all important branches of banks and modif‌ications in COMET software to enable dial-up connectivity, f‌ile transfer facility, encryption etc.

• Switch over to online inter-bank clearing on a gross basis.

• Introduction of ‘Clearing Bank' concept for decentralised cheque processing.

• Truncation of cheques upto the value of Rs. 5,000.

• Large scale induction of computers and communication technology in service branches

• Optimal usage of SWIFT.

• NICNET, to be used for the reporting of currency chest transactions by the chest branches to their Link Off‌ices and Issue Departments of the RBI.

• Promotion of a card culture- as well as enhanced training facilities.

(b) Recommendations of the Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995)

• EFT system could be introduced immediately by framing regulations under Section 58 of the RBI Act. A Model Customer Contract agreement to govern the banker-customer relationship with regard to EFT should be adopted by all banks participating in the system.

• As a long term measure, a new legislation needed for regulating, def‌ining and determining the rights and obligations of the system providers and users.

(c) The Committee on Technology Upgradation in the Banking Sector (1998)

An electronic banking system is the backbone of a technologically developed E-Commerce scenario. Electronic banking envisages Electronic Funds Transfer or what is known as ‘smart purse'. To examine the various issues pertaining to technology upgradation in the banking and f‌inancial sector and to suggest steps for a time-bound implementation schedule of the Narasimham (II) Committees recommendations to be followed by banks and f‌inancial institutions, the Reserve Bank of India had set up a Committee on Technology Upgradation in the Banking Sector.. Tire Committee which was constituted under the chairmanship of by Shri A. Vasudevan, Executive Director of the RBI, consisted of scientists, legal advisors and experts in bank/f‌inancial management as its members. The terms of reference for the committee were as follows:

• To suggest necessary legislative changes for implementation of electronic funds transfer with, inter alia, emphasis on:

  -Encryption of Public Switching Telephone Network (PSTN) lines;

  -Admission of electronic f‌iles as evidence;

  -Treating Electronic Funds Transfers on par with crossed cheques/drafts for purposes of Income Tax etc.;

  -Record keeping;

• To recommend approaches for development of intra-bank/intra-city communication network to facilitate connectivity with VSATs;

• To suggest ways to bring about computerisation of Government accounts in an expeditious and eff‌icient manner;

• To work out modalities necessary for development and optimal utilisation of a secure, robust Wide Area Network (WAN) based on satellite with the necessary security systems, by banks and other f‌inancial institutions, to ultimately develop a sound and an eff‌icient payments system;

• To examine methods by which technological upgradation in banks and f‌inancial institutions could be effected and in the context study the feasibility of establishment of standards, designing payments system backbone and standards relating to security levels, messages and smart cards by the Institute for Development and Research in Banking Technology (IDRBT);

• To make recommendations for development of data warehousing and data mining, with a view to creating opportunities for development of eff‌icient management information system (MIS) in near future;

• To recommend guidelines for outsourcing of programme development and implementation work; and

• To make recommendations on any other related issues.