PAYMENT SYSTEMS
ELECTRONIC FUND TRANSFER AND CLEARING SYSTEM (EFTCS)
Background

The RMA with the objective of strengthening the Payment Systems in Bhutan has initiated the implementation of Electronic Fund Transfer and Clearing System (EFTCS) Project for strengthening the Payment Systems in Bhutan aimed at providing better services to the public.

With the introduction of EFTCS, the inconveniences and delays associated with the current cash and other paper based transfer of funds such as cheques and drafts is minimized as the participants are able to settle their transactions efficiently and faster.

Benefits of EFTCS

Following are some of the benefits of using the EFTCS by Individuals (customers), User Institutions and the banks:

  1. Transfer of funds from one branch of a bank to any branch of any other participating commercial bank in Bhutan shall be possible.
  2. Receipts/payments of funds shall be faster.
  3. Administrative cost associated with the conventional method of payments shall be minimized to a greater extent.
  4. It is very safe and secure mode of transfer of funds.
Types of Payments
  1. National Electronic Funds Transfer (NEFT) System

    NEFT is a nation-wide funds transfer system to facilitate individual transfer of funds from one branch of a bank to another branch of any other participating commercial bank in Bhutan. The Settlement is done on hourly basis thereby facilitating receipts of funds within an hour of transfer.

  2. National Electronic Clearing System (NECS)

    It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa.

NECS Debit

Under NECS Debit, the account of an institution shall be credited by debiting money from the accounts of many customers. In other words, NECS (Debit) is used for raising debits to accounts of multiple customers for crediting the account of a particular institution, thus involving multiple debits and a single credit.

It is a scheme under which an account holder with a bank can authorise the User Institution to recover an amount at a prescribed frequency by raising a debit in his account.

NECS Credit

Similarly, in NECS Credit transactions, the accounts of individuals maintained with commercial banks shall be credited with amounts payable to them by the company/organization for payments on account of dividends, salaries, pensions etc. In other words, NECS (Credit) is used for affording credit to a large number of beneficiaries by raising a single debit to an account of the concerned company/organization. Companies/organizations can initiate the transactions after registering themselves with the clearing house.

Types of transactions covered under NECS (Credit) are Payment of salaries, dividends, pension etc. The institution originating such Credits to the accounts of the beneficiaries shall intimate the beneficiaries about the details of such transfers including the date on which the proceeds shall be credited in their bank accounts.

Background

The Royal Monetary Authority with the financial assistance from the Asian Development Bank (ADB) introduced the Cheque Truncation System (CTS) in April 2007.

The CTS was introduced to :

  • increase the operational efficiency by reducing the time period for the settlement of interbank cheque, and
  • to reduce cheque handling cost inherent in physical clearing.

The modus operandi of the CTS operates on the basis of cheque images and electronic data received from the service centers/regional Clearing House (RCH) strategically located across the country, and is settled through a central Clearing House located in the RMA, Thimphu. The physical movement of cheque is restricted up to a designated service center where the cheque is truncated and the corresponding electronically captured image is used as the substitute for processing clearing and settlement.

The transaction life-cycle for a cheque to be cleared is on a T + 1 basis after the cheque is physically delivered/presented at the service center. This is made possible through the service center located within the vicinity of local banks to cater to their interbank clearing needs. However, with only four service centers available across the country, the movement of cheque originating from outside the geographical periphery of the service centers is being delivered through the postal courier services. In such cases, the time period from the collecting banks extends from T + 1, 2, 3… depending on the proximity and time for the cheque to reach at the nearest service center.

CTS SETUP

The four service centers/RCHs are located in Thimphu, Phuentsholing, Gelephu and Mongar. The service center in Thimphu records all time highest number of interbank cheque followed by Phuentsholing, Gelephu and Mongar respectively.

By viewing and analyzing the data representations given below, it is plausible to ascertain that the cheque volume from Thimphu RCH and Phuentsholing RCH collectively accounts for more than 80% of the total volume. Although the figure contributed by Gelephu RCH and Mongar RCH is minuscule, the important role it plays in the overall settlement of clearing outstation cheques cannot be undermined.

CHEQUE VOLUME STATISTICS

The average number of cheques presented on a daily basis is about 900. The following table represents the distribution pattern of the average volume amongst the four service centers:

Sl. No RCH Average Cheque Volume (Daily-Basis)
1 Thimphu 600
2 Phuentsholing 200
3 Gelephu 60
4 Mongar 40
Total 900
Background

"With a view to inter-connect the ATMs, POS in the country and facilitate easy banking for the common man, the RMA conceptualized the idea of implementing the Bhutan Financial Switch".

The Bhutan Financial Switch (BFS) will facilitate connectivity between the Bank's Switches, and inter-bank payment gateway of various e-commerce transactions and activities both domestic and international.

The BFS has two components:

  1. BFS-ATM - Completed / launched by Hon'ble Prime Minister on 2nd December, 2011. In the absence of a common Financial Switch in the past, ATMs of banks were operated on a stand-alone basis and customers could withdraw cash only from ATMs belonging to the card issuing bank. However, BFS now facilitates interoperability of ATMs of all commercial banks. Customers can avail ATM facility of any bank as per the convenience.
  2. BFS-PoS - Completed/launched by Hon'ble Finance Minister on 12th July, 2012. The second component under BFS, the service of interoperability of Point of Sale (PoS): POS or point of sale is the location where a transaction occurs, so in that sense POS terminal is an equivalent of a cash register

Types of cards that will be accepted in the country:

  • Domestic Debit Cards issued by commercial banks
  • MasterCard
  • Visa branded cards
  • Maestro Card
Benefits of PoS:

POS Integration provide a valuable facility for visiting foreigners, promoting cashless transactions will enhance convenience and safety for customers and merchant businesses; support expansion of business clientele; help monitor the flow of transactions within the economy, improve transparency in business financial disclosure, as well as reduce costs associated with the printing of currency.

Interbank ATM & PoS Fees
Financial Non-Financial
Nu. 12 Nu. 8
Nu. 12 (PoS)
ATM Service Fees
Financial Non-Financial
Nu. 12 per transaction 0

Note:

BFS has two distinct fee structures:

  1. Interbank fee - This is the fee paid by the issuing bank to the acquiring bank since the customer of the issuing bank has availed the ATM services of the acquiring bank i.e. Nu. 18 and Nu. 8 for the financial and non-financial transaction respectively.
  2. ATM service fee - This is the fee charged by the issuing bank directly to their customer since the customer has availed the ATM service of the banks other than the issuing bank i.e. Nu. 5
MEMBERSHIP CRITERIA

Banks joining the BFS Network should meet the following criteria:

  1. Bank Should have valid banking license from Royal Monetary Authority.
  2. Bank should have current account with Royal Monetary Authority.
  3. Bank should hold RMA's NEFT Membership.
  4. Bank should route their ATM transactions through their ATM switch.

Bhutan Immediate Payment Services (BIPS) is an important initiative to promote the use of digital payments in the country. BIPS empowers customer to remit money through different channels, such as the Internet banking, mobile phones, and ATMs, to any other receiver in any of participating banks. The system is managed by the Royal Monetary Authority of Bhutan by interconnecting all the member banks. Furthermore, it has additional Payment Gateway functionality to allow various types of e- and m-payments, such as citizens-to-government (C2G), business-to-business (B2B), government-to-citizens (G2C), etc. BIPS was publicly launched on 27th January 2017.

What are the advantages of BIPS?

Instant: Both credit and debit happens instantly

Anytime & Anywhere: Available round the clock, 24x7 including weekends and holidays

Simple: All you need for executing BIPS transfer are the beneficiary's account number.

Interbank: It supports interbank fund transfer

Secure: BIPS is based on two-factor authentication (2FA)

What are the Use cases of BIPS?

Person-to-person (P2P) domestic interbank fund transfer and payments

Over-the-counter payments (retail & merchant)

Utility bills payments

Travel & Ticketing

For more information please click the link below:


e-Brochure of BIPS