RBI Allows Authorised Payments System Providers To Offer RTGS, NEFT

The Reserve Bank of India, on Wednesday, issued operational guidelines allowing non-bank payments system providers offer real-time gross settlement and national electronic fund transfer services.

This, according to the regulator, is the first phase of the opening up of its centralised payments systems to entities other than banks. The authorised payments system providers include prepaid payment instruments, white label automated teller machine operators and card networks.

“Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem,” the central bank said in a circular on July 28. The move, it said, will reduce the cost of routing payments through banks, while lowering the risk of failure or delay in execution of fund transfers can be eliminated if the transactions are directly initiated by non-banks.

A direct access to the RBI-authorised payment operators to offer RTGS and NEFT services would mean that they can now:

  • Allot a a separate Indian Financial System Code.

  • Open a current account with the Reserve Bank in its core banking system (e-Kuber).

  • Maintain a settlement account with the RBI.

  • Become members of the Indian Financial Network and use structured financial messaging system to communicate with CPS.

Besides having a valid authorisation certificate by the RBI, the payment system providers would also be required to:

  • Have a net worth of Rs 25 crore or as prescribed in the RBI’s certificate of authorisation, whichever is higher.

  • Be incorporated in India under the Companies Act. Entities not fulfilling this requirement would need to have their Indian subsidiary or associate to enter into valid agreements with RBI, the notification said.

  • Implement centralised processing systems.

  • Have adequate technical/system readiness, including cyber resilience.

  • Be compliant with local payment data storage requirements issued by the RBI.

  • Adhere to the RBI’s master directions on Access Criteria for Payment Systems, RTGS System Regulations, NEFT Procedural Guidelines.

  • Have a satisfactory record of compliance to conditions laid out in Companies Act and regulatory guidelines.

  • Have a recommendations of the concerned regulatory/supervisory department of the central bank.

Besides, the RBI would have the final authority to suspend or terminate the membership of a PSP, if it’s found to be not complying with the access criteria on an ongoing basis, it said.

Also, non-bank PSPs can approach their bankers for a ready line of credit facility, in case of any shortfall or default in meeting their payment settlement obligations, but will not get access to the central bank’s intra-day liquidity facility.

The development comes against the backdrop of the RBI looking to open the membership to its CPS for non-bank entities, as the system has so far been accessible only to to banks, with a few exceptions, such as specialised entities like clearing corporations and select development financial institutions.

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