It had been widely felt earlier that one of the biggest bottlenecks in the banking system in the country was the lack of a system that ensures fast, safe and secure intra-bank and inter-bank communication. In fact, this deficiency had been hampering to a large extent the development of a modern, integrated payment system in the Nineties. Most of the cases of complaint against banks, in those days related to the time taken for transfer of funds across banks and between cities and to the delays in the collection of outstation cheques. Clearly, the non-availability of a reliable communication backbone had been one of the main contributors to this state of affairs. The functioning of the terrestrial line networks was hardly optimal in terms of efficiency, although of late, there has been some change in this area for the better. But, the wide geographical spread of branches of banks and the differing terrain of the country necessitated the setting up of a reliable communication backbone as an imperative factor.

The best solution in the given circumstances therefore, was to centre on the establishment of satellite based network using VSAT technology. The decision to go in for VSAT technology was a deliberate choice. For, without it, it would have been difficult to initiate the network, the Indian Financial Network or INFINET as we have now called it. Clearly, it gets the distinction of being a forerunner of an efficient telecommunications backbone for the Banking and financial sector.

VSAT is an acronym for Very Small Aperture Terminal, but more simply put it describes a small satellite terminal that can be used for one-way and/or interactive communications via satellite. VSATs are a well-established telecoms solution, with more than 500,000 terminals installed in more than 120 countries. But miniaturization of components and increased economies of scale are lower costs still further, enabling service providers to offer an increasing range of VSAT-based solutions, including rural telecoms, distance learning, telemedicine, disaster recovery, offshore networks, as well as a host of corporate and government applications.

FInancial NETwork is the communication backbone for the Indian Banking and Financial Sector. All Banks, Public Sector, Private Sector, Cooperative, etc., and the premier Financial Institutions in the country are eligible to become members of the INFINET. The INFINET is a Closed User Group (CUG) Network for the exclusive use of Member Banks and Financial Institutions. It uses a blend of communication technologies such as VSATs and Terrestrial Leased Lines. Presently, the network consists of over 950 VSATs located in 127 cities of the country and utilises one full transponder on INSAT 3B.

The INFINET is primarily a TCP/IP based network. A detailed IP addressing scheme has been devised by IDRBT for all CUG members, which has to be strictly followed by all CUG members, while interacting via the communication backbone.

INFINET, an acronym for the Indian Financial Network, uses a blend of communication technologies such as VSATs and Terrestrial Leased Lines. The HUB of the VSAT network is situated at IDRBT, and consists of  an 11-metre antenna  and other satellite earth station equipments. Presently, the network consists of over 950 VSATs located in more than 180 cities of the country and utilises one full transponder on INSAT 3B.

Inaugurated on June 19, 1999, 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 FIs, Anywhere/Anytime Banking, Inter-Branch Reconciliation, Structured Financial Messaging System (SFMS) and Real Time Gross Settlement (RTGS) System are being implemented using the INFINET as the backbone

The network consists of a central earth station (HUB) which is located at IDRBT, Hyderabad. The HUB consists of an 11 metre antenna, RF, BaseBand and IF equipment. The network started with one eighth of transponder (No. 13) in INSAT 2B in June 1999. Later, in July 2000, a full transponder (No. 8) was allotted on INSAT 3B. The network works on TDM/TDMA technology

The central earth station is housed in a VSAT Control Centre (VCC) located in the ground floor of the Executive Facilities Centre of the Institute. DAMA overlay will also be soon provided to facilitate high speed data communications, voice and video. Two Diesel Generator sets of 250 KVA each, in hot stand-by mode, have been installed to supply round the clock power to the Earth Station. Two UPSs of 60 KVA each in hot stand-by mode have been installed for providing uninterrupted power to the Earth Station round the clock. Sixty tonnes of package AC units have been installed to provide ambient temperature for the Earth Station equipment. The Earth station is manned by trained personnel to ensure smooth functioning of the network round the clock

The VSAT network was just the first step in the setting up of a highly efficient communication backbone for the Indian Financial Sector. The Institute explored ways and means to expand the network using more VSATs as well as through high speed terrestrial links. In order to have a judicious mixture 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

The VSAT network and the terrestrial Leased Line network of the INFINET will co-exist by drawing from the strengths of each other. Now, the users have the facility of a dynamic option to choose between these two networks depending upon the need, urgency, suitability, volume of traffic, availability and accessibility.

The INFINET proposes to include the much-sought-after Ku Band VSAT Network to the powerful and reliable options and capabilities it already provides. Evaluation of options and vendors, for installing and integrating the Ku Band Network is on. The INFINET will be the communication backbone for the National Payments System, which will cater mainly to inter-bank applications like RTGS, Delivery Vs Payment (DVP), Government Transactions, Automatic Clearing House (ACH) etc.

There can be no better measure of success of the INFINET than the facility for quick funds transfer. The Reserve Bank of India has, over the last few years, developed many new products for the benefit of banks which are all aimed at ultimately improving customer service and systemic efficiency. One of this - the Electronic Clearing Service (ECS) - is aimed at effecting electronically, repetitive credits or debits for a large population of customers spread across a large number of branches of many banks.

Details about how the scheme works and the benefits it provides to the customers both individual and commercial and the banks are described in detail in a separate Webpage titled Electronic Clearing Service.

Another product that was Introduced is the Electronic Funds Transfer (EFT) Scheme of the Reserve Bank of India. This facility, originally was in operation between the four major metropolitan cities. Currently, RBI has 15 national clearing cells (NCC) between which electronic fund transfer is enabled. According to RBI sources, under the present set up, the apex bank can have a maximum of 15 clearing houses, along with its 15 regional offices.

However RBI is considering a proposal to utilise State Bank of India's clearing houses to increase the reach of electronic fund transfer (EFT) facility in the country. Being the largest bank, SBI has the maximum number of clearing houses across the country. A tie-up with SBI's clearing houses will enable RBI to expand the electronic fund transfer facility and provide electronic fund transfer facility to almost every district in the country. The RBI will provide the EFT software to SBI's clearing houses.

No payment systems could boast of excellence unless funds transfers take place in a on-line basis. In India, we have the banks maintaining current accounts at the various locations of the Reserve Bank of India. Managing funds flows at these current accounts and providing for transfers from one location to another is yet another activity that could be put over the INFINET. Reserve bank has introduced Centralised Funds Management System (CFMS) comprising the Centralised Funds Enquiry System (CFES) and the Centralised Funds Management System (CFMS) by the RBI. This paves the way for banks to manage their funds with the RBI in a much more efficient manner and also provide the Treasury / Funds departments of banks with latest information on their balances with the various Deposit Account Department offices of the RBI.

A natural extension of the above would be the establishment of a Real Time Gross Settlement System for the country. RBI has done considerable amount of concrete work for the setting up of a RTGS system for the country.

Reserve Bank of India has launched a project to construct a real-time gross settlement system (RTGS), which will allow secure inter-bank payments throughout the country. The system is planned to eventually interface to all RBI sites, as well as other member banks across the country.

This project will provide significant benefits to individuals and businesses throughout India. By underwriting all payments with collateral held at the Reserve Bank of India, the RTGS system will reduce systemic risk in the Indian banking system, thereby providing increased integrity and security for all interbank transactions.

Yet another area of interest is the Management Information Systems (MIS). Using Information Technology for MIS is ideal and helpful in decision making. Also INFINET helps to provide facilities for banks for transmitting information on currency chests which would ensure flow of notes and coins as required, INFINET would also provide communication tools for carrying MIS-based data of banks and financial institutions - both for their own internal usage such as periodical statements, data etc., as also for sharing across members critical data such as credit information of customers at the national level, intercity linking of ATMs, facilities for transmission of data for data warehousing purposes, data mining etc. The dissemination of information from the Central Bank to the other members - in the form of circulars, guidelines and the like could also be through the INFINET.