SFMS stand for the Structured Financial Messaging System, In November 2001, RBI introduced the Structured Financial Messaging System (SFMS), an application that would ride on the backbone of the Indian Financial Network (INFINET), as a measure to ensure greater security in the process of electronic fund transfers. SFMS provides security and prevents unauthorized access to various electronic fund transfer services introduced by RBI such as credit clearing and debit clearing and retail electronic funds transfer (EFT) systems.
Objective and Benefits of Structured Financial Messaging System (SFMS)
The use of Structured Financial Messaging System (SFMS) on INFINET will automatically bring the benefits of safe, secure and efficient money transfers.
It will also have the added benefit of settlement of inter-bank transfers taking place in the books of accounts of banks maintained with RBI, thereby ensuring finality of settlement. The Structured Financial Messaging System (SFMS) will include substantial security measures, including a PKI-public key infrastructure, with encryption software comparable to some of the best implementations in the world.
How Structured Financial Messaging System (SFMS) was Developed
The Institute for Development and Research in Banking Technology (IDRBT) and Tata Consultancy Services (TCS) entered into an agreement on 15 February 2001 for the deployment of a messaging system for the Indian banking and financial sector. With an aim to provide secure multi-layered financial messaging, the system will enable banks to send financial and non-financial messages over the Indian Financial Network (INFINET) in a secure environment.
The Structured Financial Messaging System (SFMS) is based on TCS' messaging gateway product COMS-eNABLER®. It is being optimized and deployed in a multi-tiered architecture consisting of a central hub, bank gateway and branch front-end. The system allows the definition of message structures, message formats and authorization of the same for use by the financial community. Notably, banks and financial institutions will use specified messages for a wide range of applications such as simple messaging, EFT (Retail, RTGS), ECS, electronic debit, online trading in government securities, centralized fund query for banks and FIs . / Anytime Banking, Inter-Branch Reconciliation etc. through INFINET. To use the Structured Financial Messaging System (SFMS), banks need to have their terminals at their branches connected via LAN, WAN or even PSTN lines to servers located at a central location in a city. The terminal can only be accessed through a smart card and a personal identification number (PIN). The messages have to be digitally signed under the Public Key Infrastructure (PKI).
Messages based on this platform are processed in a safe and secure environment and banks and financial institutions will be able to ensure secure electronic message delivery. Software developers say an advantage in the system is that it allows banks to launch innovative products across centers and cities. Another advantage is that it provides a safe and secure interbank communication. Individual banks only need to integrate their systems with SFMS to avail the facility. Applications like simple messaging, electronic clearing system, electronic loans, online trading in government securities, centralized fund enquiry for banks and financial institutions, anywhere anytime banking, inter-branch solution etc. can be communicated through SFMS through INFINET can go. The integration of existing bank applications would require interaction between the respective bank, IDRBT, and TCS and the bank's application provider. Application program interfaces are provided for this purpose.
Branches have the front end connected to the gateway(s), and the gateway(s) in turn are connected to a central hub. The system is integrated with a smart card-based PKI infrastructure that ensures complete confidentiality, integrity, security, encryption and decryption mechanisms with complete acknowledgment and non-repudiation techniques. These will be compliant with ISO and ANSI standards, as recommended by the Dr. Vasudevan Committee Report on Technology Upgradation in the Banking Sector. Structured Financial Messaging System (SFMS) facilitates online message generation which, after authorization, is communicated through Direct Processing (STP) without any human intervention. Financial messaging system ensures that the Indian banking and financial services sector is at par with the rest of the world.