RBI Allows Non-bank Entities To Process NEFT, RTGS Transactions

The Reserve Bank of India, RBI will allow non-banking entities a membership in Centralised Payment System, CPS in a phased manner, meaning they will be able to process NEFT and RTGS transactions, RBI stated in a press release.

CPS, Real Time Gross Settlement, RTGS and National Electronic Funds Transfer, NEFT were only open for banks, clearing corporations and some development financial institutions until now.

The press release stated that in the past few years, the share of non-banking entities such as Prepaid Payment Instrument (PPI) issuers, Card Networks, White Label ATM (WLA) operators, Trade Receivables Discounting System (TReDS) platforms has grown in volume.

CPSs system membership will act as an encouraging step and will fortify the participation of non-banking entities in providing customised solution to the users in the payment space.

This facility is expected to minimise settlement risk in the financial system and enhance digital financial services' reach to all user segments. However, these entities will not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions in these CPSs.