CBB launches new online, real-time national payment system

The Real Time Gross Settlement (RTGS) is a large-value inter-bank fund transfer system which banks use to settle inter-bank transfers for their own account as well as for their customers. The processing and settlement of such transactions takes place in real-time, online mode, with final and irrevocable intra-day settlement.

Simultaneously, the CBB has launched the new Securities Settlement System (SSS), which facilitates real-time, online settlement of all conventional and Islamic Government securities transactions, including sale/purchase, auction (issue/allotment) and Repo (repurchase) transactions.

The RTGS and the SSS are seamlessly integrated.

'The RTGS is a modern, efficient and robust inter-bank payment system, which transfers funds on transaction-by-transaction basis with finality in settlement, throughout the processing day, in a secure environment with minimal settlement and systemic risk,'

said Dr Abdul Rahman Saif, Executive Director, Banking Operations, at the CBB.

'The successful implementation of the RTGS-SSS systems is a major milestone in the continuous development and modernization of Bahrain's national payment system, the lifeline of the national economy,' said Dr. Saif.

The RTGS-SSS systems were implemented in a phased manner with the final phase completed on 9 August 2007. All of Bahrain's retail banks are now conducting transactions smoothly on the new systems in real-time on-line mode.

'With the successful migration of all participating retail banks into the new system, Bahrain has joined a select group of RTGS countries in the world,' said Dr Saif.

The RTGS platform is used for transacting all electronic inter-bank fund transfers, a significant percentage of which is conducted by banks on account of their customers; settlement of (net) cheque clearing batches and (net) automated teller machine (ATM) clearing batches. The SSS provides a platform for effecting clearing and settlement of Government securities (both conventional and Islamic), payment of interest/return, maturity payment and repurchase agreement (Repo & Reverse Repo transactions, both for conventional and Islamic securities) and sale/purchase of both conventional and Islamic securities. In fact, the SSS is the depository of all government securities.

'The RTGS system offers considerable benefit to banks' customers, who can now effect and receive electronic fund transfers on the same day, as against 2-4 days previously,' said Mr. Ahmed Buhijji, Director, Banking Services, at the CBB.

Banks, on the other hand, can significantly improve their liquidity management & collateral management (government securities as collateral) as the RTGS and SSS systems provide in real-time details of all transactions, both receipts and payments and the fund and securities position. The RTGS and SSS are straight through processing (STP) systems, facilitating payment and settlement in real-time on-line mode and enabling the banks to reconcile their books on the same day.

Both systems are available to the market participants from 8am to 1.45pm every working day, from Sunday to Thursday.
The implementation of the RTGS-SSS systems has created a new group of highly trained personnel within the CBB and the Bahrain's banks.

'The CBB adopted a systematic approach for the implementation of the RTGS-SSS Systems, preparing the market participants through awareness programmes, training and participation in testing/trial run and ensuring their smooth and efficient migration to the new systems,' said Dr Saif.

'Our efforts have resulted in the transfer of knowledge and skills to personnel of participating banks.'

Dr. Saif thanked the banks for their cooperation in the timely and efficient implementation of the RTGS-SSS project.