Till now, only banks were allowed to use RTGS and NEFT payments facilities
The aim is to encourage participation of non-banks across payment systems, the central bank said
Reserve Bank of India (RBI) on Wednesday extended the National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) facilities to non-bank payment system operators. Till now, only banks were allowed to use RTGS and NEFT payments facilities. Now, Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can use NEFT and RTGS modes.
"Membership to the RBI-operated Centralised Payment Systems (CPSs) – RTGS and NEFT – is currently limited to banks, with a few exceptions. It is now proposed to enable non-bank payment system operators like Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms regulated by the Reserve Bank, to take direct membership in CPSs. This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments," RBI governor Shaktikanta Das said.
The aim is to encourage participation of non-banks across payment systems, the central bank said. "This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments. These entities will, however, not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions in these CPSs. Necessary instructions will be issued separately," a statement by RBI mentioned.
"This is a very positive development by RBI and will give a big impetus to online payments and the digitisation of the Indian economy. 24 x 7 enabling of NEFT, RTGS etc gives a big boost to commerce which will have a multiplier effect on our economic growth and GDP," said Abhishek Soni, chief executive officer and co-founder of Upwards.
"Alongside, it also strengthens India's position globally as the flagbearer of the most advanced digital payments and fastest settlement cycles after UPI," he further added.
“Augmenting non-bank players by bringing RTGS and NEFT to their existing portfolios is a credible move that will help them drive more customer traction and recover from last year's losses in the wake of COVID-19. Earlier, customers had to rely on banks for these services, but with this initiative, they can use it on other platforms as well," Ankur Maheshwari, chief financial officer, MoneyTap said.
The central bank also increased the maximum end of day balance for payment banks to ₹2 lakh. Earlier, the limit was ₹1 lakh. Payments banks have been asking a hike in deposit limit for a long time.
This move is a massive move in the direction to help MSMEs, unorganised entities and other small businesses. This also shows the trust that RBI has placed on payments banks to make this a move in right direction. There are still 20 percent of unbanked citizens in the country and this will help them avail better, faster and safer services of the bank," Rohit Garg, co-founder and chief executive officer, Smartcoin said.
Reserve Bank of India on Wednesday kept interest rates unchanged and maintained an accommodative stance. The decision came amid a renewed threat to growth due to the resurgence of coronavirus cases in the country. The repo rate has been maintained at 4% and reverse repo rate at 3.35%.
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