RBI: Amendments in Payments Systems Rules

February 25, 2022

The Reserve Bank of India has amended the Payments and Settlement Systems Regulations. This system allows the companies who are seeking to run payment businesses to apply for licenses from the regulator.

Overview:

The application for licensing should include the technology platform which is to be used, the operator’s process flow, interoperability with operators of the other payment systems, and security features.
As per the rules that have been set, the operators will be required to submit all documents and information which are desired by the RBI from time to time.
Three months after the closing of the account, annual accounts also have to be submitted by the system provider to the regulator along with a copy of the audited balance sheet.

What is a payments system?

It is a system that is used to settle financial transactions. It is done through monetary value transfer and includes several mechanisms that facilitate fund transfer from one party to another. The payment system includes the participants and the users, the technologies and standards on which the system operates, and the rules and regulations that guide its operation.

The Board for Regulation and Supervision of Payment and Settlement Systems (BPSS), which is RBI’s sub-committee is India’s highest payments systems related policy-making body.

About Payment System Operators (PSOs)

PSO is an organization that has been granted permission to operate a payment system. PSOs mostly outsource their settlement and payment-related activities to several other entities.

What is the function of the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS)?

It is a sub-committee of the RBI and the country’s highest body related to the payments system. BPSS is empowered to authorize, prescribe policies, and set certain standards for supervising and regulating the country’s payment and settlement systems. RBI’s Department of Payment and Settlement Systems acts as the Secretariat of the BPSS and executes its directions.

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