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