The Reserve Bank of India (RBI) has decided to allow non-bank payment system providers (PSPs), including prepaid payment instruments (PPI) issuers like mobile wallets, card networks and white label ATM operators to participate in the Centralised Processing System (CPS) as direct members.
The RBI move — first indicated in April 2021 — means allotment of a separate Indian Financial System Code (IFSC) to non-banks, opening a current account with the RBI in its core banking system (e-Kuber) and maintaining a settlement account with the RBI. It will also mean membership of Indian Financial Network (INFINET) and use of Structured Financial Messaging System (SFMS) to communicate with CPS.
According to the RBI, 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,” it said. The RBI said the risk of failure or delay in execution of fund transfers can also be avoided when the transactions are directly initiated and processed by the non-bank entities. Non-bank entities shall transfer funds from their Current Account to RTGS Settlement Account and vice versa during the operating hours.
CPS includes Real Time Gross Settlement and National Electronic Funds Transfer systems, owned and operated by the RBI.