Central Bank switches to real time payment system

New scheme allows banks to keep track of transactions made from their BDL accounts

The Central Bank has adopted a new payment system allowing the immediate settlement of interbank transfers.The ‘Real time Gross Settlement’ system, dubbed BDL-RTGS, was brought into effect on July 9.

The RTGS applies to all inter-bank transactions, namely cheques, payment cards, and credit transfers. Through the system these transactions are performed electronically, via the SWIFT network, across accounts held at BDL. The balance of the corresponding banks changes with each transaction. Settlements are immediate, final, and irrevocable. The system is only applicable for domestic transactions.

Ramzi Hamadeh, director of the Payment Systems at BDL, said the new system speeds up transactions and ensures more transparency, compared to the previously used net settlement scheme. In the previous system, payments made in a certain period of time were not settled directly, but were delayed to be settled in one lot.

“(RTGS) allows banks to keep track of their account (at BDL) and monitor incoming and outgoing transactions throughout the day,” said Hamadeh. The system provides a sound legal foundation for interbank payments and minimizes credit risks due to settlement lags. Hamadeh said the RTGS will also enhance the structure of capital markets.

BDL employs a National Payment System (NPS) through which it manages fund transfers on behalf of public and private institutions. The NPS comprises an automated clearing house system (BDL-CLEAR) and a system for government payments (BDL-PAYGOV), and, lately, the real time settlement system (BDL-RTGS).

The new system is mandatory for all banks and ATM outlets, as well as for Midclear, the central securities depository. The participation of other financial institutions is optional.

All participants are charged a monthly membership fee. A flat fee will be charged for each transaction request. BDL charges an additional operational fee for each transaction.

Reported by Abeer Darwiche