Lightweight Payment and Settlement System

May 31, 2023

The Reserve Bank of India (RBI) is paving the way for a lightweight payment and settlements system, which it aptly calls a “bunker.”

The Purpose of the Lightweight Payment System

The RBI envisions the lightweight payment system as a means to facilitate uninterrupted functioning of essential payment services. This system is designed to ensure minimal downtime during critical situations, maintaining the liquidity pipeline of the economy. By processing transactions vital for the stability of the economy, including government and market-related transactions, the system plays a pivotal role in safeguarding financial operations.

Differentiating the Lightweight System from Existing Systems

The lightweight payment system stands apart from existing systems like UPI, NEFT, and RTGS in terms of its design and purpose. While conventional systems are designed to handle large transaction volumes and sustained availability, the lightweight system focuses on extreme and volatile situations. The existing systems rely on complex wired networks and advanced IT infrastructure, making them vulnerable to disruptions caused by natural calamities or war.

The Independence of Infrastructure

One of the key aspects of the lightweight system is that its infrastructure is independent of the underlying technologies of existing payment systems. By not relying on the complex networks of UPI, NEFT, or RTGS, the lightweight system can ensure operational continuity even if the traditional payment systems face disruptions.

The Role of the Lightweight System in Extreme Conditions

The RBI describes the lightweight payment system as a bunker equivalent in payment systems. During catastrophic events like natural calamities or war, the lightweight system can serve as a reliable and resilient solution. It operates on minimalistic hardware and software and remains active only on a need basis, ensuring that payment and settlement services remain functional even when the information and communication infrastructure is disrupted.

Preparing for Extreme Situations

Having a lightweight payment system prepared for extreme situations is crucial for maintaining the liquidity pipeline and the confidence in digital payments. In times of disruptions caused by natural calamities or war, traditional payment systems can become temporarily unavailable. By providing uninterrupted payment services, the lightweight system acts as a resilient solution, ensuring the stability of the economy and enhancing public confidence.

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