All about National Financial Switch PDF

Hello and welcome to exampundit. As a part of Banking Awareness, today we are sharing all important information on National Financial Switch.

So, National Financial Switch is an important banking topic for all major bank exams.

National Financial Switch

The National Financial Switch was launched by the IDRBT on 27 August 2004, connecting the ATMs of three banks, Corporation Bank, Bank of Baroda and ICICI Bank.

National Financial Switch (NFS) ATM network having 37 members and connecting about 50,000 ATMs was taken over by NPCI from Institute for Development and Research in Banking Technology (IDRBT) on December 14, 2009.

The primary headquarters is located at Mumbai.

Any bank that provides core banking services with 24×7 transaction banking capabilities with or without ATMs may join the National Financial Switch through a sponsor bank.

This allows non-scheduled Urban Co-operative Banks (UCBs) and Regional Rural Banks (RRBs) to gain access to the national network of over 103,000 ATMs in the country.

Before 14 August 2011, access was limited to scheduled banks with RTGS membership.

Salient Features of National Financial Switch

  • NFS has introduced sub-membership model which enables smaller, regional banks including RRBs and local co-operative banks to participate in the ATM network.
  • NFS has maintained high standards of application and network uptime of above 99.50% which has helped our member banks ensure enhanced customer experience.
  • Also, Dispute Management System (DMS), has benefitted members with high operational efficiency and ease of online transaction life cycle management (chargeback, representment, etc.) in the network apart from being compliant with local regulatory requirements.
  • NPCI has also tied up with International card schemes like Discover Financial Service (DFS), Japan Credit Bureau (JCB) and China UnionPay International (CUPI) which allows their cardholders to use ATMs connected to NFS network.
  • Also, Fraud Risk Management (FRM) solution is offered as a value added service to monitor transactions (in real time) and to generate alert or decline the transaction in the NFS network

Apart from basic transactions like Cash Withdrawal, Balance Enquiry, PIN Change and Mini Statement, National Financial Switch also offers other Value Added Services (VAS) on ATMs/CDMs like:

  • Interoperable Cash Deposit (ICD)
  • Mobile Banking Registration (MBR)
  • Card-to-Card Fund Transfer (C2C)
  • Cheque Book Request (CBR)
  • Statement Request (SR)
  • Aadhar Number Seeding (ANS)

Important facts related to National Financial Switch

  • The first ATM in India was set up in 1987 by HSBC in Mumbai.
  • In 1997, the Indian Banks’ Association (IBA) set up Swadhan, the first network of shared ATMs in India. It was managed by India Switch Company (ISC) for five years
  • After the collapse of Swadhan, Bank of India, Union Bank of India, Indian Bank, United Bank of India and Syndicate Bank formed an ATM-sharing network called CashTree.
  • Citibank, the Industrial Development Bank of India, Standard Chartered Bank and Axis Bank formed a similar network called Cashnet.
  • Punjab National Bank and Canara Bank also created such networks.
  • The IDRBT collaborated with Euronet Worldwide and Opus Software to build a platform to allow banks to connect their own switches to the NFS.
  • So, NFS consisted of an inter-ATM switch and a e-commerce payment gateway.

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