RBI opens up RTGS, NEFT to non-banks in phases
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Authorised non-banks payment system providers including prepaid payment issuers, card networks and white label ATM operators will be eligible to participate in central payment systems like RTGS and NEFT in the first phase, according to the Reserve Bank of India (RBI).
By extending access to payment systems to more entities, the central bank is seeking to provide impetus to digital payments.
As per RBI’s notification on “access for Non-banks to Centralised Payment Systems” to authorised non-bank payment system providers (PSPs), non-banks include entities like PSPs and NBFCs that are regulated by Reserve Bank as also entities that are under the remit of other financial sector regulators like PFRDA, IRDAI, SEBI.
Currently, apart from banks, very few select non-banks have been given approval to participate in CPS so far. Banks have been providing the services to non-banks for their payment and settlement needs.
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“Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem,” RBI noted, adding that it also brings advantages to non-banks like reduction in cost of payments, minimising dependence on banks, reducing the time taken for completing payments, eliminating the uncertainty in finality of the payments as the settlement is carried out in central bank money.
A non-bank getting direct access to CPS will be allotted a separate Indian Financial System Code (IFSC), can open a Current Account with the Reserve Bank in its core banking system (e-Kuber), maintain a settlement account with RBI, and get membership of Indian Financial Network (INFINET) and use of Structured Financial Messaging System (SFMS) to communicate with CPS.
Eligibility criteria
For access to CPS, non bank PSPs would require, among others, a valid certificate of authentication by the RBI under the Payment and Settlement Systems Act, 2007, networth of at least ₹25 crore, incorporation in India, adequate technical and system readiness including cyber resilience and compliance with local payment data storage requirements.
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“Entities incorporated outside India shall empower their local offices to carry out all operations in respect of CPS, but the responsibility for all operations and management of any contingency, including settlement obligations, shall remain with the foreign parent institution, which has taken authorisation as PSP,” the RBI further said.
Nature of transactions that can be executed will depend upon the type of membership approved for RTGS while some categories of PSPs will be permitted to participate in NEFT also.
RTGS/ NEFT customer payments can be initiated by PPI issuers to merchants/ payment aggregators; WLA operators to agencies handling ATMs; and Full-KYC PPI customers to load the PPIs from their bank account.
RTGS inter-bank transfers can be initiated by non-bank PSPs to maintain sufficient balance in their escrow account with member bank/s based on net debit or credit position; and WLA operators and PPI issuers to other member banks/ non-banks.
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RBI said card networks will not be allowed to use the RBI current account for their settlement guarantee and related activities. Non-banks would be expected to submit applications for membership to CPS to the RBI.
“Reserve Bank shall endeavour to complete the process of scrutinising the applications, that are complete with all required documents, within 60 days of receipt,” it said.
The RBI had in April this year proposed to enable regulated payment system operators to take direct membership in Central Payment Systems such as RTGS and NEFT.
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