Fintech Companies Member of Centralized Payment System: RTGS and NEFT

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Key highlights:

  • The Reserve Bank of India (RBI) announced that fintech companies processĀ RTGS NEFT transactions.
  • New interoperability standards and cash withdrawal capabilities for digital payment wallets.
  • The new step by RBI will reduce settlement risk.

RBI new announcement


Paytm, Visa, Mastercard, and PhonePe will soon start the RTGS and NEFT transaction. News norms on interoperability and user can withdraw cash from ATMs. These reforms seek to level the playing field for non-bank payment operators and banks. These will lower down the settlement risks by broadening the payment system.

Significance of RBI’s announcement

Digital transfers were only available to banks for the processing of interbank settlements and company pay-outs. It is now proposed to allow non-bank PSOs such as PPI issuers, card networks, white-label ATM operators, and Trade Receivables Discounting System (TReDS) platforms controlled by the RBI to join Centralised payment systems (CPSs) directly. The decision by RBI to allow non-banks to make CPSs would spur infrastructure development and reduce settlement risks. The rapid growth of digital payments is by the UPI infrastructure. This step will give additional value to product innovation and integration.

2018 guidelines by RBI

The RBI released recommendations in October 2018 for the voluntary implementation of interoperability for full-KYC PPIs, but the migration toward interoperability has been minimal. The account balance cap on these PPIs has been raised from Rs 1 lakh to Rs 2 lakh. More PPIs, such as semi-KYC closed-loop wallets, will be converted into absolute KYC digital wallets. Full- KYC PPI’s can also go for cash withdrawal. Holders would have the peace of mind of ensuring they can access cash while keeping a balance in their PPI accounts, giving a boost to digital payments.

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