The Internationalization of India’s Structured Financial Messaging System (SFMS): A Game Changer for Cross-Border Transactions


In recent years, the Reserve Bank of India (RBI) has been actively working towards internationalising the Indian Rupee and its payment systems. While significant strides have been made in promoting cross-border transactions and interlinking payment systems with other countries, one crucial aspect of this endeavor has largely remained unnoticed: the internationalisation of India’s Structured Financial Messaging System (SFMS). SFMS plays a pivotal role in facilitating secure financial messaging within India, enabling the smooth functioning of fund transfers through platforms like NEFT and RTGS. This blog delves into the potential of SFMS and its superiority over SWIFT, the widely used messaging system for international payments.

Understanding Structured Financial Messaging System (SFMS) and its Domestic Role

Operational since 2001, Structured Financial Messaging System (SFMS) serves as a robust platform for providing secure financial messaging services to domestic banks and financial institutions within India. Around 250 members utilize SFMS through either thick client or cloud-based systems. However, it’s essential to differentiate between fund transfer platforms like NEFT and RTGS, which are validated by secure messages sent through SFMS, and the actual messaging system itself.

SWIFT vs. SFMS: The Key Differences

The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is widely used as the messaging system for international payments, acting as a conduit for secure financial messages between financial institutions. On the other hand, SFMS, while primarily domestic in usage, possesses advanced capabilities that make it an ideal candidate for internationalisation. In fact, SFMS matches or even surpasses SWIFT in terms of messaging standards, capabilities, and cost.

The Cost Advantage of SFMS

SWIFT members are burdened with substantial annual charges, totaling around $130,000-$140,000, which include connection fees, traffic and usage charges, and additional costs. In contrast, if SFMS is internationalised, our estimates suggest that it would cost less than half of SWIFT, taking into account membership fees, exchange rate fees, money laundering screening charges, and other expenses. This makes SFMS an attractive and cost-effective alternative for financial institutions worldwide.

The Technical Superiority of SFMS

While SWIFT is currently migrating from MT (Message Text) Standards to ISO 20022, a process that could take several years, SFMS is already equipped to support ISO 20022. This standard is superior to MT in terms of consistency and data storage. Furthermore, SFMS provides additional message types for interbank transactions, such as Letters of Credit, which foreign banks can leverage. These capabilities set SFMS apart and render it a more flexible and advanced messaging system compared to SWIFT.

The Potential for Global Adoption

The internationalisation of SFMS can significantly enhance the resilience of the global financial architecture by reducing dependency on a single messaging system. Partner countries can utilize SFMS for domestic payments, and as more nations adopt it, it can become a widely accepted messaging standard for international transactions. Its interoperability with SWIFT ensures a seamless coexistence between the two systems, further strengthening the global financial ecosystem.


While the Reserve Bank of India has been focused on promoting cross-border transactions and internationalising the Indian Rupee, the hidden gem lies in the potential internationalisation of Structured Financial Messaging System (SFMS). This robust and cost-effective messaging system, already equipped with ISO 20022 support, can compete with SWIFT on a global scale. By exporting Structured Financial Messaging System (SFMS) to partner countries, India can contribute to the diversification and resilience of the global financial architecture, making it less reliant on a single messaging system. Embracing SFMS is a step towards a more connected, efficient, and secure global financial landscape.

Frequently Asked Questions (FAQ) – Internationalisation of SFMS

1. What is Structured Financial Messaging System (SFMS)?
SFMS is an advanced messaging platform operationalised in 2001 by the Reserve Bank of India (RBI). It provides secure financial message services to domestic banks and financial institutions within India. It is a crucial component for validating fund transfer transactions through platforms like NEFT and RTGS.

2. How does SFMS differ from SWIFT?
SFMS and SWIFT are both messaging systems used in financial transactions, but they serve different purposes. SFMS is primarily domestic, while SWIFT is widely used for international payments. SFMS has advanced capabilities, supports ISO 20022, and offers cost advantages over SWIFT.

3. What are the advantages of internationalising SFMS?
Internationalising Structured Financial Messaging System (SFMS) presents several advantages. It can offer cost savings for financial institutions, as it is estimated to cost less than half of SWIFT in terms of annual charges. Additionally, SFMS supports ISO 20022, making it technically superior to SWIFT in terms of consistency and data storage.

4. Is SFMS interoperable with SWIFT?
Yes, SFMS is interoperable with SWIFT, allowing for a seamless coexistence between the two messaging systems. This ensures that partner countries can adopt SFMS for domestic payments while still maintaining connectivity with institutions using SWIFT for international transactions.

5. How will the internationalisation of SFMS benefit the global financial system?
By encouraging partner countries to adopt Structured Financial Messaging System (SFMS), the global financial system can become less reliant on a single messaging system. This diversification enhances the resilience of the financial architecture and reduces potential risks associated with over-dependence on a single platform.

6. How does SFMS facilitate international payments?
SFMS is primarily used for domestic payments within India. However, if internationalised, SFMS can provide secure messaging capabilities for interbank transactions across borders. This can make it an attractive option for countries looking for a cost-effective and technically advanced messaging system.

7. Can SFMS be adopted by other countries without switching to ISO 20022?
Yes, SFMS already supports ISO 20022, making it technically compatible with SWIFT’s transition to this standard. Therefore, any country looking to use SFMS can continue to use MT (Message Text) standards if they choose to do so, without the need for immediate conversion.

8. What are the potential applications of SFMS for foreign banks?
Structured Financial Messaging System (SFMS) offers certain additional message types, such as Letters of Credit, for interbank transactions. Foreign banks can leverage these capabilities to facilitate their transactions, making SFMS a technically advanced and flexible option compared to SWIFT.

9. How does the RBI promote cross-border transactions and internationalisation of the Rupee?
The RBI has been proactively working towards internationalising the Indian Rupee and its payment systems. It has signed significant memorandums of understanding with other central banks, including the Central Bank of the UAE, to promote the use of the rupee and the UAE dirham bilaterally and facilitate fast and cost-effective cross-border fund transfers.

10. Can SFMS be used solely for domestic payments?
Yes, SFMS is primarily designed for secure financial messaging and validation of fund transfers within India. However, its advanced capabilities make it an attractive candidate for internationalisation and adoption by partner countries for domestic and international transactions.

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