RBI changes RTGS, NEFT payment rules – know details here
The Reserve Bank (RBI) authorised non-bank payment system providers (PSPs) to participate in centralized payment systems (CPS) such as its Real Time Gross Settlement (RTGS) and the National Electronic Fund Transfer (NEFT) System, on Wednesday (July 28). The Reserve Bank said that it would be implemented in a phased manner.
In a notification that the RBI issued on Wednesday, it said that on a review of extant arrangements and after detailed discussions with 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”.
RBI had said in April that non-banks would be allowed to use CPS like RTGS, NEFT, but in a phased manner. However, so far only banks are allowed to use the facilities of RTGS and NEFT payments. The Reserve Bank is trying to speed up digital payments by increasing access to the payment system.
These institutions will be able to provide NEFT, RTGS facilities
RBI has said in its latest circular that card networks, white label ATM operators issuing prepaid payment instruments (PPI) will be allowed to participate in CPS in the first phase. A statement issued by the RBI said that after reviewing existing arrangements and discussing them in detail with payment system providers (PSPs), it is proposed that in the first phase, authorized non-bank PSP, such as PPI issuers, card networks and white label ATM operators, will be its direct members. This means that these institutions will be able to provide facilities like NEFT and RTGS to their customers.
Apart from banks, so far only a select few non-banks were allowed to participate in the CPS. Non-banks that have been given membership/access to CPC include select financial institutions such as standalone primary dealers, clearing corporation of stock exchange, central counter party, retail payment system organisation, NABARD, EXIM bank and DICGC. Non-banks with direct access to CPS will be allotted a separate IFSC that can open a current account in its Core Banking System (e-Kuber) with the Reserve Bank, maintaining a settlement account with RBI.
The risk of payment failure will be reduced
RBI said direct access to CPS of non-banking institutions will reduce the risk in the payment system. It will prove beneficial for non-banks too. This will reduce their payment costs and reduce their dependence on banks. When non-banks are able to make direct payments, the risk of failure of payments will be reduced and the number of payment delays will also be reduced.