Publications

Early in the year 1996, the Department of Information Technology, Reserve Bank of India had written to all its Offices/Departments and commercial banks emphasising the need to prepare detailed inventory of hardware, operating systems and software, scope the problem, decide on the prescription to solve the problem i.e. repair, replace and retire, undertake detailed testing and prepare contingency plans on the Year 2000 problem. This was followed up with circulation of reading material on different aspects of millennium problem viz. awareness, project planning, testing, contingency planning, etc., in particular those downloaded from the web sites of the FEDRESERVE, the Bank for International Settlements and the Bank of England, besides those received from vendors/corporate bodies. The Reserve Bank of India has circulated a book ';Are we really Y2K compliant'; by Prof. S. M. Padwal and Shri S. D. Page of National Institute of Bank Management, Pune, which discusses in detail each aspect of the Y2K problem. Presentations by Tata Consultancy Services and M/s Infosys to heads of the Central Office Departments and the Top Management of the RBI were arranged with a view to enlighten the participants on the magnitude and various dimensions of the Year 2000 problem and testing of the systems for Y2K compliance. A booklet titled ';Year 2000 PC LAN Tools and TIPS'; containing step by step instructions for testing of hardware, system software and a floppy containing the program for testing the IBM PC compatible Servers/PCs were forwarded to all our Regional Offices and Central Office Departments to undertake testing at their places of work. A booklet entitled ';Year 2000 (Y2K) Compliance Issues';, giving the Year 2000 (Y2K) Compliance Test Plan, Evaluating Systems for Year 2000 Compliance, Year 2000: the Millennium Rollover Practical Advice for Users of the Single UNIX specifications, the ISO solution to put an end to date chaos, a Summary of International Standard Date and Time Notation, ISO 8601 – Date and Time Representation, DISC PD 2000 – 1 – a Definition of Year 2000 Conformity Requirements and a booklet on ';The Millennium Problem in Embedded Systems'; were circulated to regional offices and central office departments of the Reserve Bank. A copy each of this was also sent to IBA so that it could arrange to circulate them to banks.

The Reserve Bank of India had written to various organs of the Central Government - Finance, Telecommunications and Power requesting them to ensure Y2K compliance in embedded sector viz. Power, Communications, Transportation, etc.; Ministry of Finance has also been requested to take up the issue of setting up of a National Y2K Compliance Authority to ensure Y2K compliance by all public and private bodies. The Human Resources Development Department of the Reserve Bank of India has written to all banks and financial institutions to introduce sessions on the Year 2000 problem in all the training programmes conducted at their training establishments. Such programmes have already been introduced in all training establishments of the Reserve Bank.

A critical step for addressing the Year 2000 problem is the assessment of all areas and activities affected by the millennium change and the development of corresponding detailed plans to address conversion of the affected systems. The Reserve Bank of India has 23 Offices, 3 Training Establishments and 4 National Clearing Centres spread throughout the length and breadth of the country. The Reserve Bank issued a questionnaire to all RBI Offices/Departments/Training Establishments with a request to furnish the details of hardware, system and application software and its status regarding Y2K compliance. It has transpired that the Reserve Bank of India has about 2400 PCs, 100 Servers apart from IBM mainframes at four NCCs. The operating systems in use are MVS/XA, UNIX, Novell NetWare, Banyan Vines, Windows NT, DOS and Windows 3.11/95/98.

Application software are developed in-house or supplied by vendors. All the critical Application Software developed in-house and supplied by vendor have been identified. The in-house developed application software are mainly the input based payment and settlement system, settlement of securities, foreign exchange management, investment, pay-roll and house-keeping packages, and statistical returns, etc. For all these applications project leaders have been identified and are on the job of making these application software Y2K compliant.

The importance of timely preparations for the millennium change requires establishing the Year 2000 project as a strategic objective of the financial institution with a high degree of involvement by senior management. Keeping this in view, the Top Management of the Reserve Bank of India, in the meeting held on March 18, 1998, emphasised that the millennium problem should be tackled in right earnest by the Reserve Bank of India and Financial Sector. Accordingly a Working Group under the guidance of the Deputy Governor, Reserve Bank of India, was set up. Three Executive Directors together with the incharges of regulatory departments, the Indian Banks' Association, the National Institute of Bank Management and a few commercial banks where extensive computerisation has been made, are members of the Working Group. The organisational chart of the Working Group has been given in Figure - 3.1. Further, it was also decided that the Working Group would constitute sub-groups to monitor the compliance by (i) different segments of banking and financial institutions, and (ii) within the Reserve Bank of India. In order to have focussed monitoring, a Project Cell has been formed in the Department of Banking Supervision of the Reserve Bank of India, for monitoring Y2K compliance in the banking and financial sector. The organisational chart of Y2K Compliance Monitoring of Banking and Financial Sector by the Reserve Bank of India is given in Figure – 3.2. The responsibility of monitoring the Y2K compliance within the Reserve Bank of India was entrusted to the Department of Information Technology of the Reserve Bank of India. In order to monitor the progress made by various Regional Offices, Chief General Managers have been advised to furnish the progress made in their monthly D.O. letters to the Governor, Reserve Bank of India. The Regional Offices and Central Office Departments of the Reserve Bank of India, have been advised to form a small sub-group to monitor the progress made in respect of Y2K compliance of all hardware and software. The organisational chart of the Y2K Compliance Monitoring in the Reserve Bank of India is given in Figure – 3.3.

The Department of Information Technology submits a report once in two months to the Top Management, bringing out system wise details on the progress made in solving the millennium problem. The senior officers visit each regional office to assess and advise on the steps to be taken to address the Y2K problem, which includes detailed testing. Details of up-to-date progress up to the end of September 1998 are given in Annexure-I.

Testing by outside Agency

The Reserve Bank of India has desired that after getting Y2K compliance in respect of hardware, operating systems and application software from different Departments/Regional Offices, in house or by the vendors, the Bank should get an outside agency to test the compliance of critical systems independently. Accordingly, it is proposed to carry out testing by external agency (agencies) from January 1999 onwards.

The hardware, operating systems and the critical application packages being used in the Central Office Departments and Regional Offices of the Reserve Bank have been analysed in this annexure for Year 2000 compliance. The compliance status of the major computer systems used in the Banking Departments, Public Debt Offices, MICR Cheque Clearing, Establishment and Accounting, Currency Management Applications, Electronic Payments, Department of External Investments and Operation's back office applications have been identified with target dates set for compliance.

Replacement of IBM mainframe systems in National Clearing Cells used for MICR cheque processing with fully Y2K compliant system has been taken up and will be completed by June 1999. While replacing the systems, care has been taken not to disturb the code line on cheques, the control documents and various outputs given to the banks along with processed cheques, so that they may not face any problem of interface. The packages developed in-house such as Delivery vs. Payment, Relief Bonds Scheme of the Public Debt Office, Electronic Clearing Service, Electronic Funds Transfer, Pay Roll, Accounting Software etc., are being made Y2K compliant by the internal teams. The target date for compliance excepting in the case of replacement of IBM mainframe systems and forex back office application packages is December 31, 1998. The latter will be done before June 30, 1999. Applications developed by vendors are being analysed and are being outsourced or appropriately upgraded to meet the compliance of year 2000 by the target date.

The Reserve Bank is in the process of replacing all its 80286/80386 PCs with the latest Y2K compliant machines. Further, instructions have been issued to all Departments/Offices in the Reserve Bank of India to utilise the non Y2K compliant 80486/Pentium Servers/PCs in non-date sensitive areas of applications. Offices/Departments have also been advised to purchase only Y2K compliant new systems in future.

All the applications software developed in-house are being made Y2K compliant and the target date fixed therefor is end of 1998. The applications software outsourced have been already awarded to the vendors for making them Y2K compliant.

As regards operating systems, offices have been advised to go in for Y2K compliant version of Novell NetWare, SCO UNIX, Windows NT, DOS, Windows 95/98, Banyan Vines, and HP-UX and their patches.

The Board of Directors of the Reserve Bank of India are taking keen interest in the efforts being made by the Reserve Bank of India in particular and the banking and financial sector in general to take care of the problem of Y2K.

The following Section gives the Y2K compliance status of payment and settlement systems, cheque clearing systems and securities settlement systems operated by the Reserve Bank of India.

Payments Systems: The Indian retail payments system consists of clearing systems for cheques managed by Reserve Bank of India and Commercial Banks.

MICR Clearing Centres managed by Reserve Bank of India: The mechanised cheque processing system adopting MICR technology for cheque clearing is in operation at the four metropolitan cities viz. Calcutta, Chennai, Mumbai (at Nariman Point and Bandra-Kurla Complex) and New Delhi. These are managed by the Reserve Bank of India. The IBM 4381 mainframe systems running MVS/XA together with the IBM 3890 Reader/Sorter Systems and CPCS 1.7 cheque processing application software currently being operational since 1987 at the four National Clearing Cells at Calcutta, Chennai, Mumbai (Nariman Point) and New Delhi are not Y2K compliant. The Reserve Bank has decided to replace the existing cheque processing systems with the state-of-the-art fully Y2K compliant systems. These fully Y2K compliant systems are scheduled to be operational by the end of June 1999.

The vendor has already started the process of making Y2K compliant, the HP 9000 Systems running HP-UX and BancTec 5700 Reader/Sorters with TPS cheque processing application software at MICR Clearing centre at Bandra-Kurla Complex in Mumbai. By end of December 1998 this system would be made Y2K compliant.

In the year 1994 the Reserve Bank of India recommended extension of the MICR technology to centres having 100 or more bank branches with a daily cheque volume of 10,000 in clearing house. Accordingly, 26 centres were initially identified for introduction of MICR technology for cheque clearing. However, as of now only 10 centres are operationalised. Out of the 10 MICR centres, 9 have reported Y2K compliance. The remaining one will be Y2K compliant by end of December 1998.

Electronic Clearing Services (ECS) - Credit Clearing: The Electronic Clearing Service envisages substitution of paper instruments by electronic credits or debits. ECS Credit Clearing consists of large number of credits with a single debit as in the case of interest/dividend/commission payments by corporate bodies. The existing system is a semi automated system which uses the clearing house infrastructure to process and distribute credits spread over a large inter-bank/branch network. This is in operation at the four NCCs at Mumbai, Chennai, New Delhi and Calcutta apart from Ahmedabad, Hyderabad, Bangalore, Kanpur, Nagpur, Jaipur, Patna, Bhubaneshwar, Guwahati, Chandigarh, Thiruvananthapuram and Pune (managed by SBI). As per the existing file layout, settlement date (ddmmyy) is provided in the credit contra record (Record type 11). However, now the programmes have been modified to generate various reports to print the date as dd/mm/yyyy, and the same software has been running at various centres. In the proposed layout of credit contra record provision of settlement date as (ddmmyyyy) has been made. Accordingly all programmes have also been modified. Required changes in the documentation are being done.

Electronic Clearing Services (ECS)- Debit Clearing: The ECS Debit Clearing is a reverse of ECS Credit Clearing with multiple debits leading to a single credit over an Inter-bank branch network. Mahanagar Telephone Nigam Limited (MTNL) at Mumbai, Chennai and Calcutta has joined this scheme. A variant of ECS Debit Clearing termed RAPID (Receipt and Payment of Instruments/Documents) has been introduced in Mumbai. ECS Debit Clearing - RAPID is a system of giving mandate for specified amounts based on monthly demands from the company or agency participating in this service. The RAPID has been experimentally launched for Bombay Suburban Electric Supply Ltd. (BSES), Mumbai for payment of electricity bills. The Application Software has been made Y2K compliant. This scheme is in operation at Mumbai, New Delhi, Calcutta, Chennai, Ahmedabad, Bangalore and Hyderabad.

Electronic Funds Transfer (EFT )- Pilot Project: The setting up of large scale electronic funds transfer service is a critical requirement of modern payments system. At present, many banks offer Intra bank funds transfer services between their branches in different parts of the country through their internal data networks, telex and TT messaging services. However, an Inter-bank funds transfer mechanism is still in its infancy. A pilot project is in operation between Mumbai and Chennai. This process will cover all the public sector banks and subsequently will be thrown open to all the banks. A nation wide EFT service needs an effective delivery system, which can be provided by the proposed VSAT network. The EFT Application Software has been made Y2K compliant.

Floppy based Input Clearing: The Floppy based input clearing system is employed for clearing settlement relating to High Value clearing i.e. where the value of individual clearing instrument is at least Rs.1 lakh, Inter bank clearing and Return clearings in respect of High Value Clearing and of MICR Clearing. At non-MICR centres where the RBI is managing the clearing house the main clearing is also carried out under the Floppy Based Input Clearing System. As regards Inter City Clearing, the clearing instruments drawn on outstation banks (in the area of jurisdiction of MICR clearing centres) and presented in local clearing houses are realised through the inter city clearing system. With a view to introducing item wise settlement based on each clearing instrument presented, a decision has been taken to replace the existing software with a software which incorporates information on each clearing instrument. Floppy based input clearing software is being converted to meet the Y2K compliance. The Application Software will be made Y2K compliant before December 31, 1998.

Securities settlement system: The Delivery versus Payment System for processing the transactions in Government dated securities held in Subsidiary General Ledger (SGL) Account at Public Debt Office, Mumbai was made operational from July 17, 1995. In this new system, it is ensured that the delivery of securities and payment are made simultaneously to avoid the default risks of buyer not receiving the securities after making the payment and seller not receiving the payment after delivering the securities. The Application Software has been made Y2K compliant.

Application Software working in the Deposits Accounts Department (DAD-BASIS), Relief Bonds Scheme in Public Debt Office and Public Accounts Department are being made Y2K compliant. Similarly, the back office operations of the SWIFT Software working in the Department of External Investments and Operations is being made Y2K compliant and is expected to be completed by December 31, 1998. The Application Software development work for the Central Accounts Section, Reserve Bank of India, Nagpur, is being developed by the vendor and it is expected to be completed by December 31, 1998.

BANKNET: The Reserve Bank of India operates the BANKNET, a X.25 Communication Network based on the low speed leased lines from Department of Telecommunications (DoT) and X.25 Switches, Packet Assembler Disassembler (PAD), Modems and Network Management System etc. The X.25 Switches and PADs are installed at NCC sites at Mumbai, Delhi, Calcutta, Chennai and Nagpur. There are also remote PADs installed at Bangalore, Hyderabad, New Delhi, Chennai, Calcutta Offices of the Bank and Central Office Building, B-K Complex, World Trade Centre, Bankers' Training College in Mumbai. This Network was established in early 1990 and majority of the equipment have become obsolete going by the present technology available and the network bandwidth requirements of the proposed Applications such as Electronic Funds Transfer - Retail, Real Time Gross Settlement System (RTGS), File Transfer, Messaging and Queuing, Electronic Mail etc. The Equipment, the System Software and Application Software installed for this network may not be Y2K compliant. This Network is used for Electronic Funds Transfer - Pilot Project, Electronic Mail, File Transfer, etc., using RBINet Mail and File Transfer Communication Software. The Reserve Bank of India is setting up the VSAT Network for Banking and Financial Sector. The proposed VSAT Network also supports X.25 Protocol, for which switching will be done by Switches being installed at HUB site Hyderabad. The proposed VSAT network will be predominantly a Transport Control Protocol / Internet Protocol (TCP/IP) network.

RBINet: The RBINet is using the four HP 9000 Business Class Servers running HP-UX 9.XX installed at four NCCs as its E-Mail Servers and DOS PCs and SCO UNIX machines used as Clients. We are considering migration to International/de-facto Standards like X.400/Simple Message Transport Protocol (SMTP), Message Oriented Middleware (MOM) on the proposed VSAT network.