The Reserve Bank of India (RBI) proposed to relax norms for entry of new players in the retail payment systems with a view to give a boost to innovation and competition. The RBI has been issuing guidelines for various payment systems and grants authorisation to non-banks for setting up and operating payment systems.
Licensed banks also need to obtain specific permission from Reserve Bank for setting up and operating a payment system. At the end of 2018, there were 89 authorised non-bank Payment System Operators (PSOs).
The RBI’s policy paper on ‘Authorisation of New Retail Payment Systems’ proposes a multi-pronged policy action for a more appropriate level of retail payment systems and operators.
With regard to entry point norms for entities, the paper said a judicious approach needs to be adopted with regard to networth criteria.
“For all payment systems it would be desirable that they have (a) physical presence in the country, (b) impeccable track record, and (c) are likely to conform to the best overall standards, including those pertaining to customer service and efficiency,” the paper said.
It also makes a case for alignment of regulatory framework to encourage enhanced participation of both bank and non-bank entities.
Earlier in June last year, the RBI had announced that it would encourage more players to participate in and promote pan-India payment platforms and would bring out a policy paper.
The objective, it said was to minimise the concentration risk in the retail payments market from a financial stability perspective and to give a fillip to innovation and competition.
The central bank has invited comments on the policy paper by February 20.