South Asia Region: Strengthening Payment, Remittances, and Securities Settlement Systems in South Asia

South Asia Region: Strengthening Payment, Remittances, and Securities Settlement Systems in South Asia


Many countries in the South Asia Region face similar difficulties with respect to payment systems. The ability to share experiences, problems, and solutions across countries can strengthen and accelerate, through peer pressure, the policies that each nation adopts, as well as reduce the time and cost of modernization. The South Asia Payment and Securities Settlement Initiative (SAPI) originated from a high-level mandate from the South Asia Central Banks' Deputy Governors (Colombo meeting, July 2007) to replicate the successful experience with regional cooperation in payments systems in the Southern African Development Community, Latin America and the Caribbean, the Commonwealth of Independent States, and the Arab region.


FIRST funded TA worth $400,000 to assess the payments and securities settlement systems in the SAPI countries, including Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. The project helped create the International Advisory Council and the Regional Secretariat to support the SAPI implementation and to ensure continuity. The following specific country-level activities were undertaken under SAPI:

  • Review of the payment, remittances, and securities settlement systems in in Afghanistan, Bangladesh, Bhutan, Nepal, Pakistan and Sri Lanka
  • Review of the national market for international remittances in India using the framework of the CPSS- World Bank General Principles for International Remittances

No specific activities were initiated in Maldives, as it had an ongoing payment systems modernization project funded by the World Bank.

The reports analyzed the prevailing situation and the planned reforms, identified gaps, and provided detailed recommendations and road maps for improving payment infrastructures. Detailed legal assessments and proposals were also provided to authorities in these countries.


The analytical work and strategic advice funded by FIRST have accelerated a number of reforms:

  • Bangladesh has initiated a project to implement a real-time gross settlement (RTGS) system with funding from the Asian Development Bank, with TA from the World Bank Group under a programmatic trust fund financed by AusAID (the Australian Agency for International Development) and the Bangladesh Investment Climate Fund, and implemented an automated clearinghouse (with funding from DFID). The Bangladesh Bank has issued comprehensive payment and settlement systems regulations as a prelude to the enactment of the National Payment Systems Act, which is under review.
  • Nepal has proposed to start a project to develop an RTGS system in 2015. It has established a payment systems unit and developed a national payment systems strategy. It has also embarked on legal and regulatory reforms (with TA from the World Bank Group under a trust fund financed by the South Asia Development Facility, a multidonor trust fund managed by IFC, and funding from the Government of Luxembourg).
  • Afghanistan has begun a project to implement a RTGS, a central securities depository, an automated clearing house, and a national card payments switch with funding from the World Bank.
  • The State Bank of Pakistan published a report titled "Payment and Settlement Systems in Pakistan," established a dedicated payment systems department, and enhanced the operating rules and procedures of the large-value payment system known as the Pakistan Real-time Interbank Settlement Mechanism (PRISM).