policy objective of promoting a safe, secure, sound and efficient payment system, the reserve bank has taken several initiatives to develop and promote electronic payments infrastructure. towards this end, the rbi introduced the electronic clearing service ( ecs ) and the electronic funds transfer ( eft ) system in 1995, the real time gross settlement ( rtgs ) system in march 2004, the national electronic funds transfer ( neft ) system in november 2005 and cheque truncation system ( cts ) in february 2008. let me present a brief overview of these payment - system products launched by the rbi. electronic clearing service with a view to upgrading our payment system to the international standards, the reserve bank took the initiative and set up electronic clearing service in india, in the mid 1990s, which is the counterpart of the automated clearing house ( ach ) system in certain other countries. it has two variants – ecs - credit clearing and ecs - debit clearing. while the credit clearing operates on the principle of ‘ single debit - multiple credits ’ and is used for making payment of salary, pension, dividend and interest, etc., the debit clearing functions on the principle of ‘ single credit - multiple debits ’ and is used for collecting payments by utility service providers like electricity, telephone bills as well by banks for receiving principal / interest repayments for housing and personal loans from the borrowers. at present, about 18 million transactions flow through the ecs system every month. this facility is currently available at 70 centers in the country. settlement takes place on t + 1 basis and the cycle gets completed on t + 1. rbi is also in the process of developing a national ecs system – about which i will talk a little later. internet banking it may be recalled that pursuant to advent of internet - based banking in india, the rbi had appointed a working group on internet banking in 2001 to address the issues relating to technology and security, legal aspects, and the regulation and supervision of the internet banking activities of the banks. the recommendations of the group were accepted for phased implementation and detailed guidelines on internet banking were issued by the rbi to the banks in june 2001, for adoption by the banks offering internet banking facilities. even though the group had made the recommendations in the context of the internet banking, these were to be applicable, in general, to all forms of electronic banking, to the extent relevant. the banks are now permitted to offer internet banking facilities based on the boardapproved internet banking policy

in recent times, cad has been increasing and reached a historic high of 6. 7 per cent during the quarter october - december, 2012. it is of course not sustainable in the long run. therefore, a structural shift in the composition of our trade account – increasing exports and curtailing non - productive imports, such as, gold – is imperative. what needs to be emphasized is that the current account deficit has so far been successfully financed without any drawdown on our foreign exchange reserves. this has been possible with sustained capital inflows, which though not as buoyant as in the pre - crisis days, has still been impressive. nevertheless capital inflows cannot be taken for granted and there is a need to create the enabling conditions to attract and retain long - term foreign capital. the urgency now comes from two sources : the need to bridge the current account deficit and the need to provide resources – particularly of the long term type – for infrastructure and other investment needs. capital account management in the indian context, management of capital account has been challenging. so far, the approach of reserve bank of india has been that of cautious gradualism, informed by the experience of other developing countries in latin america and east asia who perhaps liberalized their capital account too soon and too fast. yet, it should be recognized that as far as the real sector is concerned, the capital account is substantially open with regard to sourcing debt and equity from abroad as well as exploiting investment opportunity abroad. the restrictions in capital account are pronounced as far as the financial sector is concerned. the policy caution is motivated by apprehensions of sudden cessation or reversal of flows, which some influential commentators believe to be unfounded. even within the constraints imposed by a gradualist approach, reserve bank and the government of india have taken several steps that include progressive increase in investment limits for foreign institutional investors ( fiis ) in government and corporate debt, introduction of qualified foreign investor ( qfis ) as a separate investor class, etc. exchange rate volatility talking about the external sector, i would like to briefly touch upon the issue of rupee volatility, because next perhaps only to the stock indices, sharp movements in the rupee usually agitate market participants, including those who have no direct exposure ( chart 3 ). in this context it must be recognized that in the post - bretton woods era, most currencies have had their own episodes of volatility and particularly in the past few years during