12 August 2021
RBI has released a circular on 28 July 2021 giving direct access for non-bank entities like pre-paid payment instrument issuers, card networks and white label ATM operators to the centralised payment systems of RBI i.e., real time gross settlement (“RTGS”) and national electronic fund transfer (“NEFT”).
As per the circular, direct access to centralized payments systems means (a) allotment of separate IFSC, (b) opening a current account with RBI in its core banking system, (c) maintaining a settlement account with RBI, and (d) membership of Indian financial network and use of structured financial messaging system. By allowing direct access, RBI aims to (a) enhance efficiency as the risk of failure or delay in executing fund transfer gets reduced, (b) improve competition as nonbanks will actively offer financial services which were the sole domain of banks, (c) improve risk management, and (d) ensure data protection.
As per the circular, in order to be eligible to access centralized payments systems, the non-bank entity is required to obtain a certificate of authorisation from RBI under the Payment and Settlement Systems Act, 2007. Further, the non-bank is required to be incorporated as a company under the Companies Act, 1956 or 2013, with a net-worth of at least INR 250 million. Entities incorporated outside India may empower their local offices to carry out all operations in this regard. The entity will also be required to adhere to RTGS system regulations, NEFT procedural guidelines and other instructions prescribed by RBI.
Please click here to read the circular.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
