The Reserve Bank of India (RBI) has allowed non-bank payment system providers to participate in central payment systems namely Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems, in a phased manner.
Non-bank payment system providers consist of card networks and white label ATM operators, and by giving these entities access to the central payment systems (CPS), the central bank is aiming to lay emphasis on increasing digital payments.
"Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem. It also brings advantages to non-banks like reduction in cost of payments, minimising dependence on banks, reducing the time taken for completing payments, eliminating the uncertainty in finality of the payments as the settlement is carried out in central bank money, etc," the RBI said in a notification sent to heads of all non-bank payment system providers.
It further added that the risk of failure or delay in execution of fund transfers can also be avoided when transactions are directly initiated and processed by non-bank entities.
Till now, only a few non-bank entities had access to CPS apart from banks.