The National Bank of Georgia (NBG) has announced an open, international, two-stage tender in an effort to upgrade the existing payment systems. As a result, the bank will improve the existing Real Time Gross Settlement (RTGS) system and introduce the Government Securities Settlement system (GSS).

According to the NBG, the existing RTGS system that is responsible for funds transfer from one bank to another has become outdated and cannot meet the demands of the rapidly developing banking and financial system anymore. Moreover, the introduction of the Government Securities Settlement system will on one hand allow NBG to pursue more effective monetary policy and on the other hand contribute to the development of the securities market. Therefore, NBG considers the establishment of the modern payment system as one of the priorities of the bank.

"NBG is responsible for the smooth operation of the payment system in the country. Establishment of the modern payment system will reduce the operational risks and increase the security of the transactions. Introduction of the Government Securities Settlement system and integration with the RTGS is important as well. Moreover, the new system will reduce the operational costs", said Zurab Grigalashvili, head of the Payment Systems Department.

NBG commenced the active phase of the payment systems reform project in November 2007. Representatives from the commercials banks and the State Treasury were actively involved in the preparation phase. A group of foreign experts from the World Bank provided the technical assistance of the project. The NBG will be able to fully launch the new RTGS system in summer, next year.

The deadline for submission of the tender proposals is September 5, 2008.

The Real Time Gross Settlement system is defined as a set of payment instruments, banking procedures and technologies that provides the funds transfer individually, according to each payment order in real time. The system is based on the internet technologies. RTGS is organized and operated by the NBG. The safety of the system is secured by electronic-digital signature.

Commercial banks and the State Treasury are direct participants of the RTGS system. Commercial banks pay service fees according to transactions made, while the service for the State Treasury is provided free of charge.