Lok Sabha Question No. 3002 (UNSTARRED), answered on 2023-03-20
Subject: Transactions through SWIFT
Ministry: FINANCE
Asked by: P. Velusamy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 3002

ANSWERED ON MONDAY, 20 th  MARCH, 2023/ PHALGUNA 29, 1944 (SAKA)

## Transactions through SWIFT

## 3002.  SHRI VELUSAMY P.:

Will the Minister of FINANCE be pleased to state:

- a)  whether the Government is aware of the fact that the sanctions blocking the use of Society for Worldwide Interbank Financial Telecommunications (SWIFT) for transactions with Russia has created lot of problems in transferring of funds through SWIFT system and if so, the details thereof;
- b)  whether  the  RBI  (Reserve  Bank  of  India)  is  taking  any  steps  for  domestic  financial messaging for centralized payment system globally;
- c) if so, the details thereof;
- d)  whether  the  objective  of  the  Structured  Financial  Messaging  Solution  (SFMS)  is  to ensure non-repudiation and security in  messaging,  enabling  large  value  of financial transaction and this messaging technology can be used as an alternative to SWIFT; and
- e)  if so, the details thereof along with the steps taken by the RBI to invite more countries to participate in this process?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

(a) to (e): Any messaging system which facilitates transfer of financial messages culminating in  financial  transactions  must  conform  to  commonly  and  widely  accepted  standards,  apart from being robust, safe and secure. Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a globally accepted and used messaging system for transfer of  funds  across  borders  and  is  used  for  transfer  of  financial  messages.  As  per  available information, since February 2022, a number of Russian Banks have been disconnected from SWIFT messaging system.

In India, the Structured Financial Messaging System (SFMS) is the domestically developed financial  messaging  system  used for  Centralised  Payment  System  (CPS) applications i.e., NEFT and RTGS. SFMS was launched on 14.12.2001 at the Institute for Development and Research  in  Banking  Technology  (IDRBT),  and  is  currently  operated  by  Indian  Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of the Reserve Bank of India (RBI). SFMS  rides  over  the  Indian Financial Network  (INFINET), which is a membership-only Closed User Group network that comprises RBI, CPS member banks and financial institutions, and provides financial messaging services through its Member Interface application  to  all  RTGS  participants.  SFMS  is  backed  by  the  communication  medium  of INFINET and supports ISO 20022 standard message format for payment systems.

SFMS has many utilities to offer. Its major advantage is that it can be used practically for all purposes of secure communication within the bank and between banks. RTGS and NEFT messages are routed through SFMS, and Letters of Credit, Bank Guarantees, etc are also communicated through SFMS. The PKI based security feature of SFMS  ensures authentication,  confidentiality  and  non-repudiation  of  the  messages  exchanged  between banks.

The  Payments  Vision  2025  published  by  RBI  has  envisaged  feasibility  of  providing membership / technology of INFINET to other jurisdictions and expansion of the framework of  SFMS  to  provide  a  domestic  payment  system  platform  to  other  jurisdictions,  so  as  to provide faster, convenient and cost-effective direct payment channels with other jurisdictions.

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