Non-Bank PSPs to Join Centralised Payment System

Non-Bank PSPs to Join Centralised Payment System

Part of: GS Prelims and GS -III – Economy

In news Recently, the RBI allowed non-bank Payment System Providers (PSPs) to participate in Centralised Payment Systems (CPS – RTGS and NEFT), as direct members.

• Presently, only banks and select non-banks such as NABARD and Exim Bank are allowed access to CPS – NEFT and RTGS.

Key features

• Allowed in a Phased Manner: In the first phase, PSPs such as Prepaid Payment Instruments (PPIs), card networks and White Label ATM (WLA) operators will be allowed access. 
• Separate IFSC to Non-Banks: It means allotment of a separate Indian Financial System Code (IFSC) to non-banks, opening a current account with the RBI in its core banking system (e-Kuber) and maintaining a settlement account with the RBI.

What is the Significance?

• Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem.
• Reduction in cost of payments
• Mitigating failure or delay in fund execution
• Increasing efficiency and better risk managemen

News Source: IE