Reserve Bank of India on Wednesday extended the Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities to non-bank payment system operators. Till now, the payment facilities were only available for commercial banks. The central bank announced that non-bank payment systems like Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can use NEFT and RTGS modes.
“It is now proposed to enable non-bank payment system operators like Prepaid Payment Instrument(PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by the Reserve Bank, to take direct membership in Centralised Payment Systems(CPSs),” RBI Governor Shaktikanta Das said on Wednesday. The RBI also increased the maximum end-of-day balance limit for payment banks to Rs 2 lakh. Earlier, the limit was Rs 1 lakh. The move would potentially benefit fintech firms such as Paytm, PhonePe, and others.
RBI had earlier in October 2018 issued guidelines for adoption of inter-operability on a voluntary basis for full KYC PPIs. “As migration toward inter-operability has not been significant, it is now proposed to make inter-operability mandatory for full KYC PPIs and for all payment acceptance infrastructure,” the RBI Governor said.
The aim is to encourage the participation of non-banks across payment systems, the central bank said. “This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments. These entities will, however, not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions in these CPSs. Necessary instructions will be issued separately,” a statement by RBI mentioned. RBI’s move has been hailed by industry experts who say this will give a big impetus to online payments and the digitisation of the Indian economy