RBI announces new guidelines for ‘on tap’ authorisation of payment systems

The Reserve Bank of India (RBI) has come out with new guidelines for the on-tap authorisation of payment systems for retail in India.

Earlier, the central bank had published a policy paper on ‘Authorisation of New Retail Payment Systems’. RBI had also requested the public to come out with their suggestions and comments on the same.

With the objective to minimise the concentration risk in the market of retail payment, the RBI issued the policy paper. The central bank did so by promoting competition and innovation in India’s payments sector.

As per the circular issued by the central bank; on ‘on tap’ authorisation to entities desirous to function/operate/provide platforms for Bharat Bill Payment Operating Unit (BBPOU); Trade Receivables Discounting System (TReDS); and White Label ATMs (WLAs).

The circular listed instructions for each of the retail payment systems are below:

  1. The individuals applying for BBPOUs should hold experience in the bill collection field for a minimum period of at least one year and should maintain a net worth of Rs 100 crore at all times.
  2. WLA Operators are required to deploy ATMs in the ratio of 1:2:3 for Metro & Urban: Semi-Urban: Rural regions respectively. 

3.  WLA operators can skip deploying ATMs in urban areas if they meet the set quota of ATM deployments in rural areas. They have to maintain Rs 100 crore at all times.

4. The individuals applying for TReDS will need to have a minimum paid-up equity capital of Rs 25 crore and requiring non-promoters, to have a stake of 10 percent in the equity capital.

5. All the retail payment systems have to get RBI authorisation. It will be given on the basis of both the merits of the proposal as well as on the Apex bank’s assessment of the potential for the new companies in the particular segment.   

6. It is mandatory for all operators to follow KYC requirements as per the Master directions of KYC issued by the Department of Banking Regulation (DBR). 

The circular invited applications for receiving on-tap authorisation to new payment system operators to be submitted to the Chief General Manager, Department of Payment and Settlement Systems. 

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