IMPORTANT TOPIC OF PPB LATEST SYLLABUS 2023 | COMMUNICATIONS NETWORKS FOR JAIIB EXAMS 2O23
Important study notes on communication networks to help JAIIB candidates prepare their JAIIB Exam 2023 to cover PPB Syllabus 2023.
Topic which is covered by this article is very important from the JAIIB exam 2023 point of view. The article covers emerging trends in Communications networks for banking from the JAIIB study material 2023 from the JAIIB Syllabus 2023.
MODULE C – BANKING TECHNOLOGY
EMERGING TRENDS IN COMMUNICATIONS NETWORKS FOR BANKING
Underwritten are some of the emerging trends which are seen in Communications Network for banking from the PPB module – Banking Technology
RBI’s VSAT Network
INFINET, Indian financial network, has been a closed user group (CUG) network available for use to the exclusive member banks and Financial Institutions within this network.
SET UP: Reserve Bank of India set up this INFINET in 1999 with the help of IDRBT, Hyderabad (Institute for Development and Research in Banking and Technology).
IDRBT had researched about the procedure, methods and capability so that the network can be expanded by the use of different communication Technologies, for example: VSATs & Terrestrial Leased Lines.
LLN: A Leased Line Network (LLN) has been integrated with INFINET which connects 21 major cities to have a seamless integration of a combination of Technologies in this network.
LLN uses a mix of 2 MBPS & 64 KBPS lines & provides gateways to depend on each of these 21 connected cities.
LLN’s Network Management System (NMS) is located at the INFINET Hub at Hyderabad while its Backup – NMS is in the Main Office of Reserve Bank of India in Mumbai.
If we leave the interbank and intra bank applications which ranges from simple messaging systems out then the services of MIS, Electronic Clearing Service (ECS) for both Credits and Debits, EFT (Retail), online dealing and trading in Government securities, Centralized Funds Management System (CFMS) for Banks and Financial Institutions, Inter-Branch Reconciliation, Structured Financial Messaging System (SFMS) and Electronic Funds transfer (RTGS/NEFT) System, Anywhere banking/Anytime Banking (ATM), transmission of Inter-city Cheque Realisation advices, government securities trading, and currency chest accounting are done via using VSAT Network.
At present, the VSAT network consists of more than 950 VSATs. These VSATs are located in 127 cities in the country.
All the banks and Financial Institutions are eligible to become members of this Indian financial network.
Internet being a global network of networks i.e basically a system of computers which has allowed the computer users to exchange data, files and messages etc. Internet uses the following types of protocols:
- Serial Line Protocol (SLIP): SLIP uses TCP/IP when operating via a serial connection
- Point to Point Protocol (PPP): It is type TCP/IP protocol used for connecting one computer system to another computer system.
Internet Access Service:
There are unlimited uses of Internet access service. The most widely used services of internet are:
- FTP i.e File Transfer Protocol
- WWW i.e World Wide Web
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SWIFT (SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TELECOMMUNICATION)
The system of SWIFT is a type of format or schema according to which messages are sent to Financial Institutions on Society for Worldwide Interbank Financial Telecommunication Network.
The original format for the messages has been developed by SWIFT. And this format was made an ISO standard i.e ISO 15022. In many cases, the formats of SWIFT follow ISO Standard between custodians & this SWIFT message type was later on supplemented by ISO 20022, an XML-based version.
SWIFT India Domestic Services Pvt Ltd better known as “SWIFT India” or “the Company”, has been founded on similar principles. It has been formed by SWIFT SCRL and Indian banks, for the domestic Indian financial community & by the community. SWIFT India provides financial messaging services.
Taking the benefit of shared resources in capital, SWIFT India’s main purpose is to enable a harmonized exchange of structured financial information in the domestic Indian community among the domestic participants. It has helped in:
- Reduction of costs & Risks of data transfer
- Expansion of the reach of automated, secure and standardized exchange of information across the whole banking industry
- Brought forward new instruments, opportunities as well as market for the banking industry.
Message types: The types of messages which can be transferred or exchanged via SWIFT are:
- Real-time & bulk messages
- File transfer of structured & unstructured information
Security of SWIFT: The SWIFT system ensures the security of data which is exchanged through the application of the following controls:
- Role-based access controls
- Having 3 layers of asymmetric encryption which ensures data authenticity, integrity and confidentiality
- Maker-checker controls
- Hardware security modules
- Support for local Controller of Certifying Authorities (CCA) Licensed public key infrastructure (PKI)
International and Domestic Standards: SWIFT follows International and Domestic standards when transmitting data between banks and Financial Institutions. These standards provide:
- SWIFT supports message formats prescribed by the ISO Standards of international level such as ISO 15022 (MT) & ISO 20022 (MX). It also includes message transmission from domestic to international gateways.
- SWIFT also supports the local market practices & flows of the nation
- It also supports IFSCs i.e Indian Financial System Codes (which is local addressing scheme)
Value-added message features of SWIFT: Other than the basic services provided by the SWIFT system, it also adds value to the message features which get transmitted through SWIFT. Some of those features are as below:
- It makes sure that the message will be delivered.
- It provides the message confirming the delivery of the message as well as also warns when the message remains non-delivered.
- Banks can broadcast messages
- It has a specific Syntax and rule book for message validation
- In case of dispute, it provides non-repudiation proof that the message has been transmitted.
- The messages transmitted can be required for 124 days if they get lost or corrupted by either of the parties (sender or receiver)
- It can store and forward messages when the counterparties are not online to receive or send.
Back-office integration for straight-through-processing: SWIFT allows the
- Message transformation
- Multiple protocols (including SOAP, MQ, file transfer, etc)
- Custom workflows
Premium support: SWIFT also provides premium support in the form of the following services:
- Help in SWIFT is available 24 by 7 through online and phone support.
- Native support by back-office certified partners & services providers across Core Banking systems, Cash Management Systems, Treasury systems, Retail & Corporate Banking Systems, Payments Middleware, and Enterprise Resource Planning Systems.
- It also provides other premium features. For example onsite support, coordinated business continuity exercises, pro-active network monitoring, and health checks, and others.
So, this was about the emerging Trends which are happening in the communication networks of banking. The article has been returned after taking into consideration the syllabus of PPB paper of JAIIB Exam 2023.
PPB PREMIUM COURSE FOR 2023 EXAMS OF JAIIB
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