Mumbai: With the Reserve Bank of India's decision, the non-bank entities, such as prepaid card issuers, card networks and white label ATM operators, who provide digital money transferring platforms, will be allowed to access Centralised Payment Systems (CPS), such as Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems.
The permission is the first phase of its wide plan to bring non-banks, including fintech firms such as Paytm and PhonePe, on the same platform that was announced in April.
According to the RBI, the decision will help non-banks to reduce the cost of payments, minimising dependence on banks, reducing the time taken for completing payments, eliminating the uncertainty in the finality of the payments as the settlement is carried out in central bank money among others.
The RBI also believes that the risk of transferring money and delay can to a greater extent be avoided when the transactions are directly initiated and processed by the non-bank entities.
"On a review of extant arrangements and after detailed discussions with Payment System Providers (PSPs), it is advised that, in the first phase, authorised non-bank PSPs, viz. PPI Issuers, Card Networks and White Label ATM Operators shall be eligible to participate in CPS as direct members," said an RBI statement.
Eligibility criteria for access to CPs by non-banks include a minimum net worth of Rs 25 crore, incorporation in India, Non-banks firms get RBI nod to access NEFT, RTGS payment systems compliance with data localisation norms, adequate technical capability and cybersecurity infrastructure among others. Foreign entities would require subsidiaries incorporated in India to take necessary approvals from RBI.
"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 said.