Page 31 - Banking Finance March 2021

ARTICLE

(R)EVOLUTION OF

PAYMENT AND

SETTLEMENT

SYSTEM IN INDIA

Introduction: and purchase of goods and services are being effected or
settled by payment of money.
Payment and settlement systems employed in an economy
play a vital role in economic development. These systems
Since then various forms and styles of payment and
basically consist of the various and diverse arrangements
settlement system have evolved in course of time. India has
that we use to systematically transfer money i.e, currency,
also been an active participant in this evolution or rather
paper instruments (such as cheques, drafts) and various
revolution. Through this article we are trying to
electronic channels. When any person or entity enter into
chronologically trace the evolution of payment and
economic transactions, i.e. to purchase and sell goods or settlement system in India.
services, the value thereof needs to be settled by money or
currency.
The Past:
Payment instruments and mechanisms are long established
During the developmental stage of human beings living as
a society, the settlement happened through exchange of in India. The earliest payment instruments that are known
goods and / or services and it was called the barter system. to have been used in India were coins, which were either
After the concept of money rooted in the economy, the sale punch-marked or cast in gold silver and copper. While coins
were representing a physical equivalent, credit systems
About the author involving bills of exchange were also existing in medieval
India.
Kamal Singh In ancient India a kind of loan deed forms which were called

Manager (Research) as 'rnapatra' or 'rnalekhya' were in use. These instruments
SBICRM, Gurugram contained details of the amount of loan, the rate of interest,
the condition of repayment, the time of repayment and

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