Payments Business in Indian Banks 2009

This report, based on a detailed survey conducted across 26 commercial banks in India, is the first of its kind that has ever been conducted in India. It comes at an opportune time when the Payments Industry is seeing phenomenal growth and intense activities with a host of multinational payments processors such as First Data, TSYS etc. entering the Indian market recently. The importance of Payments as a fee-based revenue source that can act as a hedge in times of increasing volatility in the interest rate regime, and therefore in terms of Net Interest Income to Banks is becoming clearer to Indian Banks. At the same time, the need for Banks to view Payments as an Enterprise-wide holistic and Integrated Business, and not merely as a conglomeration of fragmented service offerings is highlighted in the Report. The report also studies the macroeconomic trends in the payments business in India, providing a snapshot of how electronic payments have evolved over the years and their increasing importance in the country's financial system.Although it was clear that most Indian Banks, especially the Public Sector Banks, are not yet tracking the accrued revenues from their Payments Businesses correctly, it was heartening to note that most Banks recognize the need to move to a Enterprise-wide view of the Payments Business, and invest in de-duplication, consolidation, rationalization and integration of the disparate legacy Payment Systems that exist in most banks. The report also elaborates on the concept of a Payments Hub, which operationalizes the idea of Enterprise Payments through consolidation of clearing and settlement functions of different payment products and channels at one centralized hub.


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